Oil and fuel oil hedging market update

Commentary

Brent crude futures were at $68.97 a barrel, down 29 cents, or $0.4 percent, from their last close. Brent also marked a December 2014 high the previous day, at $70.05 a barrel. U.S. WTI crude futures were at $63.34 a barrel at 07:55 GMT, down 46 cents, or $0.7 percent, from their last settlement. WTI the day before rose to its strongest since late 2014 at $64.77. Well yesterday afternoon surprised with the move it has been threatening for a few days now: it touched the $70 mark. But like market brain freeze, the heights of the market kicked in and screamed "I DON'T LIKE IT THIS HIGH", as though traders had acute acrophobia suddenly come over them. I think the U.S. deserves a gold star too, having come from a position of almost destruction after the price squeeze by OPEC to now being China's largest oil customer. Impressive. They are the crude market equivalent of the nerdy spotty kid at school who had no friends, who ends up setting up a revolutionary company and selling it to a tech giant for millions, swan around with all the celebs, and have more super cars than you have credit cards. Anyway, this market... we are sure to be in a new range of $65-70, with technical helping us up to these levels (do bear in mind that yesterday the next resistance level was at over $75). Yes, U.S. production is up; yes, the OPEC cut - if you look deeper at the numbers - doesn't constitute too much of a cut; yes, the demand increase is as elusive as the Loch Ness Monster, BUT stocks are down off their highs, OPEC compliance is good, the world economy is growing... positives outweigh the negatives - that has to be it or this market is broken. 'Yes, you can have a pay rise' sounds so much better than a 'no'. Admit it, the fallibility of human nature has pushed up this market. Maybe I have been blinded by the numbers beforehand, but you cannot deny the positive feel to this market.

Fuel Oil Market (January 11)

The front crack opened at -11.30, strengthening to -11.00, weakening to -11.20. The Cal 19 was valued at -11.90.

Asia's fuel oil markets firmed on Thursday after official data showed a sharp drop in Singapore onshore inventories of the residual fuel, reversing a recent downward trend in time spreads and refining margins of the fuel. Singapore weekly inventories fell 13.5% to a seven-month low of 19.66 million barrels (or about 2.934 million tonnes) in the week ended Jan. 10. This came as net fuel oil imports into Singapore fell 43 percent from the week before to a two-week low of 825,000 tonnes.

Marine fuel prices are expected to rise through to 2019 as demand for the fuel, also known as bunkers, remains steady amid increases in global trade volumes, said BMI Research in a note to clients. The longer-term trend in marine fuel prices will be driven by the IMO decision to cap the amount of sulphur in shipping fuels at the start of 2020.

Economic Data and Events

* 1:30pm: U.S. CPI m/m, Dec.

* 1:30pm: U.S. Retail Sales, Dec.

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

* 6pm: Baker Hughes U.S. Rotary Gas Rigs, period Jan 12, prior 182

* 6pm: Baker Hughes U.S. Rotary Oil Rigs, period Jan 12, prior 742

* 6pm: Baker Hughes U.S. Rig Count, period Jan 12, prior 924

* 8:30pm: Commodity Futures Trading Commission weekly scheduled report on futures and options positions

Singapore 380 cSt

Feb18 - 377.25 / 379.25

Mar18 - 377.75 / 379.75

Apr18 - 377.50 / 379.50

May18 - 377.25 / 379.25

Jun18 - 376.75 / 378.75

Jul18 - 376.25 / 378.25

Q2-18 - 377.25 / 379.25

Q3-18 - 375.25 / 377.25

Q4-18 - 371.25 / 373.75

Q1-19 - 363.50 / 366.00

CAL19 - 341.75 / 344.75

CAL20 - 290.25 / 295.25

Singapore 180 cSt

Feb18 - 381.75 / 383.75

Mar18 - 382.75 / 384.75

Apr18 - 382.50 / 384.50

May18 - 382.50 / 384.50

Jun18 - 382.00 / 384.00

Jul18 - 381.75 / 383.75

Q2-18 - 382.25 / 384.25

Q3-18 - 380.75 / 382.75

Q4-18 - 377.25 / 379.75

Q1-19 - 371.25 / 373.75

CAL19 - 350.25 / 353.25

CAL20 - 299.25 / 304.25

Rotterdam Barges

Feb18 364.75 / 366.75

Mar18 365.50 / 367.50

Apr18 366.00 / 368.00

May18 365.50 / 367.50

Jun18 364.75 / 366.75

Jul18 363.50 / 365.50

Q2-18 365.50 / 367.50

Q3-18 362.25 / 364.25

Q4-18 354.50 / 357.00

Q1-19 346.50 / 349.00

CAL19 321.25 / 324.25

CAL20 271.25 / 276.25


		FuelEU penalties spark contract disputes as first-year compliance costs emerge Shipowners and charterers negotiate biofuel handling, payment timing, and multiplier penalties under new regulations.

		Singapore tops first global container port ranking by DNV and Menon Economics The port leads across all five assessment pillars in inaugural industry report.

		Marine fuel procurement becomes strategic imperative as regulatory pressures mount: LR Operators must adopt comprehensive fuel strategies amid supply constraints and compliance costs, says Lloyd's Register.

		Private Chinese shipbuilder plans to deliver eight dual-fuel boxships Yangzi Xinfu is fully booked until May 2029 and expected to post annual sales revenue exceeding $1.4 billion.

		Østensjø Rederi orders methanol-ready tug from Spanish shipyard Norwegian operator contracts Astilleros Gondán for vessel with diesel-electric hybrid propulsion system.

		Bound4blue establishes China production base for wind propulsion systems Spanish wind propulsion firm targets Asian shipbuilding market with outsourced manufacturing network.

		Alfa Laval and Hanwha Ocean Ecotech partner on ammonia fuel systems Collaboration aims to develop ammonia fuel technology for dual-fuel vessels in the Asian market.

		Nuclear-powered boxships could deliver $68m annual savings: Lloyd's Register Small modular reactors could eliminate fuel costs and carbon penalties while boosting cargo capacity, says report.

		Minerva Bunkering extends Las Palmas terminal concession by 15 years Bunker supplier adds barge capacity and explores new terminal for energy transition fuels.

		Ammonia Energy Association releases gas detection whitepaper with Lloyd's Register input Lloyd's Register contributed expertise to new guidance on ammonia detection systems for the maritime sector.

Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.

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