Oil and fuel oil hedging market update

Commentary

Brent futures were down 44 cents or 0.7%, at $64.37 a barrel by around 07:00 GMT. U.S. WTI crude was down 62 cents, or 1%, at $60.53 a barrel, having settled down 1% in the previous session at its lowest close since Jan. 2. I saw a great quote this morning: 'Bets on further rising oil and metals prices, for example by hedge funds, have climbed to excessively bullish levels'. Excessively bullish. I can see why this kind of comment would come from an oil end user; anything above $0 is excessively bullish. But from a bank analyst, with hedge funds up to their armpits in long oil positions, after a technical pull back, with high OPEC compliance, growing China demand - they have the power to push this back up again. The only excessive thing this morning is the use of excessive. Excessivity is rife. Looking at a more macro level, I don't think it presumptuous to assume that generally for commodities we are in a long term bull trend. The growing world economy, political dangers, uncertainty, there's also the practical implications of the new arms race that could occur. There is an Asian race between U.S. allies (eg Japan, South Korea) against China and North Korea, there's NATO against Russia, and I don't think it too implausible for the Trump administration to try for a 'Falklands moment' - a quick war that the whole country is behind to boost popularity. Let's just hope it doesn't turn into another Vietnam or Cuban Missile Crisis. But before you send all your thoughts on why this market is going to collapse, just bear in mind that over the last year and a half, people have been saying it's going to collapse, and in that time it has gone from $26 to over $70. Just think that small players with their little exposure and trading capacity aren't going to outweigh the ability of big market players to move this upwards. Yes, over a longer time period you may be proved right, but that will be in the terms of the long positions, when they have had enough of holding them and sell out for a tidy profit.

Fuel Oil Market (February 8)

The front crack opened at -10.45, strengthening to -10.15, before weakening to -10.30. The Cal 19 was valued at -14.00.

Rising Singapore fuel oil inventories weighed on Asia's fuel oil market sentiment on Thursday, dragging time spreads, fuel oil cracks and cash differentials of the fuel lower, trade sources said.

In a sign of growing prompt supplies, the March/April time spread for 380 cSt fuel oil flipped to a contango of about 30 cents a tonne on Thursday, down from a backwardation of about 10 cent per tonne in the previous session.

Singapore fuel oil inventories rose for a fourth straight week, climbing 6% to a 2018 high of 23.782 million barrels (about 3.55 million tonnes) in the week ended Feb. 7.

China's crude oil imports in January rose 20% year-on-year to a record 40.64 million tonnes, or 9.57 million barrels per day (bpd).

Economic Data and Events

* 3pm: U.S. Wholesale Inventories for Dec. M/M, est. 0.2%, (prior 0.2%)

* 6pm: Baker Hughes rig count

* ~6pm: ICE weekly commitments of traders report for Brent, gasoil

* 8:30pm: CFTC weekly commitments of traders report on various U.S. futures and options contracts

Singapore 380 cSt

Mar18 - 353.75 / 355.75

Apr18 - 353.75 / 355.75

May18 - 353.75 / 355.75

Jun18 - 353.25 / 355.25

Jul18 - 352.25 / 354.25

Aug18 - 351.00 / 353.00

Q2-18 - 353.75 / 355.75

Q3-18 - 351.25 / 353.25

Q4-18 - 346.50 / 349.00

Q1-19 - 338.50 / 341.00

CAL19 - 309.50 / 312.50

CAL20 - 241.75 / 246.75

Singapore 180 cSt

Mar18 - 359.50 / 361.50

Apr18 - 359.75 / 361.75

May18 - 360.00 / 362.00

Jun18 - 359.25 / 361.25

Jul18 - 358.50 / 360.50

Aug18 - 357.25 / 359.25

Q2-18 - 359.75 / 361.75

Q3-18 - 357.50 / 359.50

Q4-18 - 353.25 / 355.75

Q1-19 - 346.75 / 349.25

CAL19 - 318.50 / 321.50

CAL20 - 252.50 / 257.50

Rotterdam Barges

Mar18 340.75 / 342.75

Apr18 340.75 / 342.75

May18 340.50 / 342.50

Jun18 340.00 / 342.00

Jul18 338.75 / 340.75

Aug18 336.75 / 338.75

Q2-18 340.25 / 342.25

Q3-18 337.00 / 339.00

Q4-18 328.75 / 331.25

Q1-19 320.50 / 323.00

CAL19 286.50 / 289.50

CAL20 227.25 / 232.25


		Lloyd’s Register and Maersk Mc-Kinney Møller Center launch ammonia safety and training resources for shipping New tools aim to help operators build the safety management and competency frameworks needed for ammonia-fuelled vessels.

		IBT Bunkering & Trading appoints Kevin Döhmen to manage new Singapore office Döhmen tasked with developing IBT’s operation in the Asian city-state.

		Peak takes delivery of third S-class vessel and cuts steel for ammonia-fuelled ship Norwegian operator marks two events at Chinese yard as ammonia-powered newbuild programme advances.

		New Times Shipbuilding launches LNG dual-fuel tanker for Minerva 112,500-dwt Minerva Helen launched at shipyard in Jiangsu, China.

		Leonhardt & Blumberg equips first of four newbuilds with Econowind VentoFoils German shipowner installs wind-assisted propulsion technology aboard general cargo vessel Hansa Drejoe.

		Axpo and Vitol launch LNG bunkering at the Port of Civitavecchia Operation marks the extension of Axpo’s LNG bunkering network to third major Italian port.

		Grimaldi takes delivery of ammonia-ready Grande Pacifico 9,800-ceu ship is the largest PCTC in the Neapolitan Group’s fleet and the first of five sister vessels on order.

		IMO seminar in Trinidad and Tobago trains Caribbean maritime educators for the alternative fuels era A five-day regional seminar in Port of Spain addressed ammonia, methanol and hydrogen training for seafarers.

		Corvus Energy wins 40 MWh battery contract for BC Ferries’ new biofuel-compatible Summit Class vessels Norwegian battery supplier to power four new hybrid-electric ferries for Canada’s BC Ferries.

		ABS issues product design assessment for Fleetzero’s Leviathan battery system The first US-manufactured lithium iron phosphate marine battery system receives classification society approval.

Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.

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