Fri 9 Feb 2018 09:22

Oil and fuel oil hedging market update


By the Oil Desk at Freight Investor Services.



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


Marius Kairys, CEO of Elenger Sp. z o.o. Elenger enters Polish LNG bunkering market with ferry refuelling operation  

Baltic energy firm completes maiden truck-to-ship LNG delivery in Gdansk.

Samsung Heavy Industries (SHI) virtual reality (VR) training program developed in collaboration with Evergreen. SHI develops VR training solutions for Evergreen's methanol-fuelled ships  

Shipbuilder creates virtual reality program for 16,500 TEU boxship operations.

Illustratic image of Itochu's newbuild ammonia bunkering vessel, scheduled for delivery in September 2027. Itochu orders 5,000 cbm ammonia bunker vessel  

Japanese firm targets Singapore demonstration after October 2027, with Zeta Bunkering lined up to perform deliveries.

Bunkering of the Glovis Selene car carrier. Shell completes first LNG bunkering operation with Hyundai Glovis in Singapore  

Energy major supplies fuel to South Korean logistics firm's dual-fuel vessel.

Orient Overseas Container Line (OOCL) vessel. CPN delivers first B30 marine gasoil to OOCL in Hong Kong  

Chimbusco Pan Nation claims to be first in region to supply all grades of ISCC-EU certified marine biofuel.

The Buffalo 404 barge, owned by Buffalo Marine Service Inc., performing a bunker delivery. TFG Marine installs first ISO-certified mass flow meter on US Gulf bunker barge  

Installation marks expansion of company's digitalisation programme across global fleet.

Sogestran's fuel supply vessel, the Anatife, at the port of Belle-Île-en-Mer. Sogestran's HVO-powered tanker achieves 78% CO2 reduction on French island fuel runs  

Small tanker Anatife saves fuel while supplying Belle-Île and Île d'Yeu.

Crowley 1,400 TEU LNG-powered containership, Tiscapa. Crowley deploys LNG-powered boxship Tiscapa for Caribbean and Central American routes  

Vessel is the third in company's Avance Class fleet to enter service.

The inland LNG bunker vessel LNG London. LNG London completes 1,000 bunkering operations in Rotterdam and Antwerp  

Delivery vessel reaches milestone after five years of operations across ARA hub.

The M.V. COSCO Shipping Yangpu, China's first methanol dual-fuel containership. COSCO vessel completes maiden green methanol bunkering at Yangpu  

China's first methanol dual-fuel containership refuels with green methanol derived from urban waste.


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