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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

By the Oil Desk at Freight Investor Services.



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


Updated on 04 Jan 2018 09:07 GMT

Commentary

Brent closed last night up $1.27 to $67.84, WTI closed at $61.63, up $1.26. Well, 2018 has started positively for crude, hasn't it? Since Dec 27, WTI is up nearly 5%. Technicals predicted a further bullish move with a move above $67.29, and it sure did move up as thought. Also, the situation in Iran is causing people to get a little flustered, even though it hasn't affected Iranian production, yet. The market is jumping on any bullish news regardless if there is any logic around it or if it makes sense. One thing, though, that is interesting is that the front Brent crude spread has rallied around 15c in the last few days and the Singapore fuel oil market has flipped into contango for the front two months. What does this signal? Well, if Brent spreads are backwardated - meaning the next Brent month swap is cheaper but the end user market in Singapore is higher as that is in contango, is it to be a good year for the product trading market? I think a lot of people will certainly be hoping so. It will be interesting to see how this pans out. One other thing that is interesting, is the correlation between the Schlumberger stock price (Schlumberger are the world's largest oil field services provider) and the price of WTI. The two are correlated to the tune of about 0.61. So it is clear that oil services companies are indeed benefiting from the rise in crude oil prices. Could it be that these guys are the ones buying the paper market to keep not only the oil price but the equity market at yearly record highs? Answers on a postcard. Stats later.

Fuel Oil Market (January 3)

The front crack opened at -9.30, strengthening to -9.15, before weakening to -9.55. The Cal 19 was valued at -11.35.

The front-month E-W arbitrage spread was at its narrowest since Sept. 15 on Wednesday amid expectations of ample fuel oil flows into Singapore inJanuary and February.

This came as fuel oil inventories In the Fujairah oil hub fell to a seven-week low as suppliers there shipped more of the residual fuel to Asia amid slow Middle Eastern demand.

Fujairah fuel oil inventories fell 16%, or 1.661 million barrels (about 248,000 tonnes), from a week ago to 8.626 million barrels (1.287 million tonnes) in the week ended Jan. 1.

Over the past year, weekly Fujairah inventories have averaged 10.359 million barrels (or 1.546 million tonnes) since records began in Jan 2017.

Economic Data and Events

* EIA weekly U.S. oil inventory report, 4pm; TOPLive blog coverage begins 3:50pm. (1 day later than usual)

Singapore 380 cSt

Feb18 - 376.75 / 378.75

Mar18 - 377.00 / 379.00

Apr18 - 377.00 / 379.00

May18 - 376.75 / 378.75

Jun18 - 376.25 / 378.25

Jul18 - 375.00 / 377.00

Q2-18 - 376.75 / 378.75

Q3-18 - 374.00 / 376.00

Q4-18 - 369.50 / 372.00

Q1-19 - 361.75 / 364.25

CAL19 - 338.75 / 341.75

CAL20 - 288.75 / 293.75

Singapore 180 cSt

Feb18 - 380.50 / 382.50

Mar18 - 381.50 / 383.50

Apr18 - 381.50 / 383.50

May18 - 381.50 / 383.50

Jun18 - 381.50 / 383.50

Jul18 - 380.50 / 382.50

Q2-18 - 381.50 / 383.50

Q3-18 - 379.50 / 381.50

Q4-18 - 375.50 / 378.00

Q1-19 - 369.50 / 372.00

CAL19 - 347.25 / 350.25

CAL20 - 297.50 / 302.50

Rotterdam Barges

Feb18 364.00 / 366.00

Mar18 364.25 / 366.25

Apr18 364.00 / 366.00

May18 363.50 / 365.50

Jun18 362.50 / 364.50

Jul18 361.00 / 363.00

Q2-18 363.50 / 365.50

Q3-18 359.50 / 361.50

Q4-18 351.00 / 353.50

Q1-19 343.00 / 345.50

CAL19 318.25 / 321.25

CAL20 269.25 / 274.25




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.






Related Links:

Oil and fuel oil hedging market update
Freight Investor Services Ltd.

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