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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Oil and fuel oil hedging market update

13 Dec 2017 08:44 GMT

By the Oil Desk at Freight Investor Services.



Commentary

Brent crude was up $64 cents, or 1%, at $63.98 a barrel by 0413 GMT. It had settled down $1.35, or 2.1%, on Tuesday on a wave of profit-taking after news of a key North Sea pipeline shutdown helped send the global benchmark above $65 for the first time since mid-2015. U.S. WTI was up 42 cents, or 0.7%, at $57.56 a barrel, having settled the previous session down some 85 cents. So the cracks in the North Atlantic pipeline have sudden and miraculously healed enough for the pipe to continue operation and not disrupt refinery production much. The market took advantage of the spike, with many taking profit at year highs. API again has predicted a pretty sizeable draw in crude levels at -7.4 mil bbls, with smaller builds on +1.5 mil and +2.3 mil on distillates and gasoline respectively. This is driving the recovery from the sell of yesterday; it's a reluctant, slow process, but a confirmation of those numbers could see us cut the deficit from yesterday in half. In other news, the World Bank is to end its funding of oil and gas exploration; this, along with the previously low oil prices, could cause somewhat of a crisis in new developments for the oil market. Investment will come too late to cope with new demand, causing an acceleration in the tightening of the market. The oil bogeyman could jump out in just over a year, and boom, the market will be caught with its pants down. EIA at 3.30pm.

Fuel Oil Market (December 12)

The front crack opened at -9.35, weakening to -9.85, before strengthening to -9.75. The Cal 18 was valued at -8.65.

Cash premiums of Asia's 380 cSt high-sulphur fuel oil climbed to their highest in December on Tuesday as deal values for physical cargoes of the fuel improved.

Improved sentiment also helped narrow discounts of the front-month fuel oil crack after steep losses in the previous week, but some traders remained cautious citing lacklustre demand and ample near-term supplies.

The narrower discount in fuel oil cracks came despite rising crude prices which climbed to their highest since mid-2015 on Tuesday as an unplanned shutdown of the UK's biggest North Sea oil pipeline supported a market already tightened by OPEC-led production cuts.

Economic Data/Events: (UK times)

* 12pm: U.S. MBA Mortgage Applications, Dec. 8

* 1:30pm: U.S. CPI, Nov.

* 1:30pm: U.S. Real Avg Weekly Earnings, Nov.

* 3:30pm: EIA issues weekly U.S. oil inventory report

** 3:25pm: TOPLive blog coverage begins

* 7pm: U.S. Federal Reserve interest rate decision

* OPEC issues Monthly Oil Market Report, including secondary- source assessment of November production that's used to measure cutback compliance. Report usually issued 11am-12pm

Singapore 380 cSt

Jan18 - 355.75 / 357.75

Feb18 - 355.75 / 357.75

Mar18 - 356.00 / 358.00

Apr18 - 356.00 / 358.00

May18 - 355.75 / 357.75

Jun18 - 355.25 / 357.25

Q1-18 - 355.75 / 357.75

Q2-18 - 355.75 / 357.75

Q3-18 - 353.00 / 355.50

Q4-18 - 348.25 / 350.75

CAL18 - 352.75 / 355.75

CAL19 - 319.75 / 324.75

Singapore 180 cSt

Jan18 - 360.00 / 362.00

Feb18 - 360.50 / 362.50

Mar18 - 361.00 / 363.00

Apr18 - 361.50 / 363.50

May18 - 361.50 / 363.50

Jun18 - 361.00 / 363.00

Q1-18 - 360.50 / 362.50

Q2-18 - 361.50 / 363.50

Q3-18 - 359.25 / 361.75

Q4-18 - 354.75 / 357.25

CAL18 - 358.50 / 361.50

CAL19 - 328.50 / 333.50

Rotterdam 380 cSt

Jan18 340.25 / 342.25

Feb18 341.50 / 343.50

Mar18 342.50 / 344.50

Apr18 342.50 / 344.50

May18 342.00 / 344.00

Jun18 341.25 / 343.25

Q1-18 341.25 / 343.25

Q2-18 341.75 / 343.75

Q3-18 337.50 / 340.00

Q4-18 329.25 / 331.75

CAL18 337.50 / 340.50

CAL19 297.50 / 302.50



Founded in 2002, Freight Investor Services is a specialist in dry bulk and commodity derivatives, including cargo freight, iron ore, fertilizer and bunker fuel. The company has offices in London, Dubai, Singapore and Shanghai.

For further details about fuel oil swaps or to discuss trading opportunities, please contact Andrew Cullen, Client Relations & Development Manager, on +44 207 090 1126, or email AndrewC@freightinvestor.com.


Image: Freight Investor Services (FIS) logo. Image credit: Freight Investor Services (FIS)




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