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| Oil and fuel oil hedging market update |
| By the Oil Desk at Freight Investor Services.
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| Freight Investor Services (FIS) logo. Image credit: Freight Investor Services (FIS) |
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Updated on 08 Feb 2018 09:18 GMT
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Commentary
Brent closed down 1.35 last night to $65.51, WTI closed at $61.79 down, 1.60. I remember a few years ago, one of the most tragic things I ever saw was an old lady who was walking in front of me drop her shopping bag. The shopping spilt everywhere and, most importantly, an Easter Egg she had obviously her grandchild rolled off the pavement on to the road and was run over by a bus. It was tragic, and I'll never forget it. Then I saw the oil market this week and the very same feeling came rushing back to me. The old ladies' bag was worn out and it was only a matter of time before it split, but she wasn't to know. I think every single local trader who has bought this market is staring at their flattened Easter egg screen this morning. The brutal truth is that the old lady should have bought a new bag but was too busy filling it with toffees, tea cakes and other confectionary sweet old ladies tend to buy every day, but the oil market should know better. The correction was so clear for everyone to see. We've dropped down to almost the level of supposed technical support after the correction, and there's bound to be some buying support at this level. I'm sure we'll flirt around the $65 per bbl mark for a bit now. Then an EGM by OPEC will be called if we drop any further, or we fly up again and OPEC start rubbing their hands together. EIA data proved the numpties at API were once again wrong (shock) and we witnessed a build on everything and, most notably, refinery run rates were up 4.4%. What happened to maintenance season? Of course the elephant in the room for everyone right now is US oil production, which is at 10.251mnbpd. That's only going to get higher. Can China continue their relentless buying to absorb all this oil? With CNY round the corner, it could be well be the Year of the Bear once again, not the Dog.
Fuel Oil Market (February 7)
The front crack opened at -10.20, weakening to -10.40, before strengthening to -10.15, closing at -10.30. The Cal 19 was valued at -14.00.
Cash differentials of Asia's 180 cSt and 380 cSt fuel oil extended losses on Wednesday amid an absence of buying interest for physical cargoes in the Singapore trading window and weaker prompt time spreads
Cash premiums of the mainstay 380 cSt fuel oil fell to a three-week low of 35 cents a tonne above Singapore quotes, down from $1.12 a tonne at the start of the week.
Meanwhile, ex-wharf premiums for 380 cSt fuel oil continued to be weighed down by sluggish demand and aggressive market offers for the break-bulk fuel as supplies compete from market share.
Fujairah fuel oil inventories snapped three straight weeks of declines, climbing to a two-week high of 7 million barrels (about 1.045 million tonnes) in the week to Feb. 5.
Economic Data and Events
* 8am: Singapore onshore oil-product stockpile data
* ~12pm: Russian refining maintenance schedule from ministry
* 1:30pm: U.S. Initial Jobless Claims for Feb 3, est. 232k, (prior 230k)
* Today, no exact timing:
** Total SA earnings
Singapore 380 cSt
Mar18 - 357.50 / 359.50
Apr18 - 357.75 / 359.75
May18 - 357.75 / 359.75
Jun18 - 357.50 / 359.50
Jul18 - 356.50 / 358.50
Aug18 - 355.50 / 357.50
Q2-18 - 357.75 / 359.75
Q3-18 - 355.75 / 357.75
Q4-18 - 351.00 / 353.50
Q1-19 - 343.00 / 345.50
CAL19 - 313.50 / 316.50
CAL20 - 245.75 / 250.75
Singapore 180 cSt
Mar18 - 363.25 / 365.25
Apr18 - 363.75 / 365.75
May18 - 363.75 / 365.75
Jun18 - 363.50 / 365.50
Jul18 - 362.75 / 364.75
Aug18 - 361.75 / 363.75
Q2-18 - 363.75 / 365.75
Q3-18 - 362.00 / 364.00
Q4-18 - 357.75 / 360.25
Q1-19 - 351.25 / 353.75
CAL19 - 322.50 / 325.50
CAL20 - 256.50 / 261.50
Rotterdam Barges
Mar18 344.50 / 346.50
Apr18 344.75 / 346.75
May18 344.75 / 346.75
Jun18 344.25 / 346.25
Jul18 343.00 / 345.00
Aug18 341.00 / 343.00
Q2-18 344.75 / 346.75
Q3-18 341.25 / 343.25
Q4-18 332.75 / 335.25
Q1-19 324.25 / 326.75
CAL19 290.50 / 293.50
CAL20 231.25 / 236.25 |
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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