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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.

Image credit:

Updated on 08 Jan 2018 09:09 GMT


Brent closed down $0.45 on Friday to $67.62, WTI closed at $61.44, down $0.57. Well, at the end of September, Brent spent a while in a $55-$60 per bbl range. Then, from the end of October to end December, it spent it in a range between $60 - $65 per bbl. It seems we are now in a range slap bang in the middle of the $65 - $70 per bbl range. So, will we follow the same pattern as previously...(?) Let's not forget that with the previous two ranges, we had the OPEC effect after the November meeting. I'm reading that people are forecasting $80 per bbl for crude, seemingly buoyed by a falling U.S. rig count. Well it doesn't make too much sense because US crude oil production is still increasing, so surely this evidences that the system is, once again, becoming even more efficient. When we look at demand, well, I didn't really see where there has been a huge shift in demand. Stocks in the world's biggest fuel oil hub, Singapore, are up 25% year on year. I think we have a classic case of short sightedness. Stocks have, relative to the highs we hit last year, come down. Production, compared to last year, has halted its upward turn. U.S. oil rigs, compared to the rate they were increasing, have flattened off. So maybe people are thinking this way. "No way," many will say. Well, just remember that the global financial system was almost destroyed by a huge debt bubble build on the packaging up of subprime mortgages, traded by all the major financial institutions for a short-term profit as the housing market could never fail, and then it collapsed as no one was looking at the makeup of these rated mortgages. It couldn't happen again. There's something about a bullish commodity market that just feels positive.

Fuel Oil Market (January 5)

The front crack opened at -9.95, strengthening to -9.85, before weakening to -9.95. The Cal 19 was valued at -11.20.

S380- front-month time spread narrowed its premium to a near two-week low on Friday, edging closer to a contango structure, as expectations of ample near-term supplies weighed on the market, traders said. Broadly, poor sentiment has weighed on Asia's fuel oil market complex in the first week of 2018, sending everything from arbitrage and time spreads to viscosity and crack spreads lower. However, this came on the back of thin trading volumes and unusually low Open Interest levels across various instruments, said sources, adding that trade activity might pick up soon as participants return from the New Year holidays.

Fuel oil stocks in ARA oil hub climbed 4%, or 37,000 tonnes, from the previous week to a total of 0.939 million tonnes in the week ended Jan. 4. Fuel oil stocks rose by over 4% as higher imports outweighed the export of a large tanker to Singapore.

Economic Data and Events

* Azeri BTC Blend loading program for February

* Bloomberg forecast of U.S. waterborne LPG exports

* Bloomberg proprietary forecast of Cushing crude inventory change, plus weekly analyst survey of crude, gasoline, distillates inventories

Singapore 380 cSt

Feb18 - 375.50 / 377.50

Mar18 - 376.00 / 378.00

Apr18 - 376.25 / 378.25

May18 - 376.25 / 378.25

Jun18 - 375.75 / 377.75

Jul18 - 374.75 / 376.75

Q2-18 - 376.00 / 378.00

Q3-18 - 373.50 / 375.50

Q4-18 - 373.50 / 375.50

Q1-19 - 362.00 / 364.50

CAL19 - 341.50 / 344.50

CAL20 - 295.25 / 300.25

Singapore 180 cSt

Feb18 - 379.25 / 381.25

Mar18 - 380.50 / 382.50

Apr18 - 380.75 / 382.75

May18 - 381.00 / 383.00

Jun18 - 381.00 / 383.00

Jul18 - 380.25 / 382.25

Q2-18 - 380.75 / 382.75

Q3-18 - 379.00 / 381.00

Q4-18 - 375.75 / 378.25

Q1-19 - 369.75 / 372.25

CAL19 - 350.00 / 353.00

CAL20 - 304.00 / 309.00

Rotterdam Barges

Feb18 362.50 / 364.50

Mar18 363.25 / 365.25

Apr18 363.50 / 365.50

May18 363.25 / 365.25

Jun18 362.75 / 364.75

Jul18 361.50 / 363.50

Q2-18 363.00 / 365.00

Q3-18 359.50 / 361.50

Q4-18 351.50 / 354.00

Q1-19 343.50 / 346.00

CAL19 321.00 / 324.00

CAL20 271.00 / 276.00

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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