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| Oil and fuel oil hedging market update |
| By the Oil Desk at Freight Investor Services.
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| Image credit: |
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Updated on 12 Jan 2018 09:08 GMT
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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 |
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. |
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