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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
Home » News

Oil and fuel oil hedging market update

14 Feb 2018 09:45 GMT

By the Oil Desk at Freight Investor Services.


Brent crude futures were at $62.68 per barrel, down $4 cents. Brent was above $70 a barrel earlier this month. WTI crude futures were at $59.06 a barrel at 07:41 GMT, down $13 cents from their last settlement. Once again, the technicals of the market have proved robust, as we rebounded off the major support level at $61.77 on Brent, and are lingering again just below the $63 mark. Again the crack is proving to be instrumental in the fuel oil market, moving significantly stronger from -10.00 level to -9.00 this morning, really supporting prices even with the dramatic drop of crude prices. I don't expect too much volume in the oil market with Chinese New Year and approaching IP week in London, but beware the slow, quite moment of prices. Like a ninja in 16th century Japan, it could be a silent assassin to profit margins. We attended a seminar on the 2020 sulphur regulation changes last night, part of which was presented by our fantastic head of bunker desk here, Luke Longhurst (yes it is bonus time). It started off as death by anagram IMO, MGO, HSFO, HILO, DIDO, LOL, BRB, KMT, TGINASO... but on a more serious note, there's some quite dramatic changes that will have big implications for refineries, shipowners, and ship operators/hirers with the impending implementation of this new regulation. I do not think it prudent to just think that this will just sort itself out; there has to be an awareness of the impact this could have. Things like the supply in the ports that are currently used in voyages or compliant fuel, the decision for people on scrubbers or no scrubbers, the rules and compliance with carrying non-compliant fuel, the increasing cost the bunkering that will be incurred because of changing to ULSFO/MGO/LNG, the changing contracts to hedge this exposure, and the need for increased financing to hedge this risk.

Fuel Oil Market (February 13)

The front crack opened at -9.45, strengthening to -9.10, weakening to -9.20, closing at -9.05. The Cal 19 was valued at -14.50.

Asia's front-month high-sulphur fuel oil crack narrowed its discount to Brent crude on Tuesday for a third straight session, boosted by falling crude oil prices since the start of February.

The March 180 cSt fuel oil crack to Brent crude was trading at about minus $6.10 a barrel around the end of Asia trading hours, compared with minus $6.94 in the previous session. This was its narrowest discount since Dec. 26.

Singapore's marine fuel sales set a monthly record in January after climbing to 4.606 million tonnes, up 3.2 percent from a year earlier, as vessels coming to the world's largest bunkering hub loaded larger amounts of bunker fuel per vessel on average.

Economic Data and Events

* 6:30am, India Jan. Wholesale Price Index All Commodities Y/y, est. 3.2% (prior 3.58%)

* 1:30pm, U.S. Jan. CPI M/m, est. 0.3%

* 3:30pm, EIA Weekly U.S. Oil Inventory Report

* Statoil 4Q Earnings

* IEA-IEF-OPEC Symposium on Energy Outlooks, Riyadh, with speakers including OPEC Sec-Gen Barkindo and IEA Executive Director Fatih Birol

* Egypt Petroleum Show in Cairo, final day

Singapore 380 cSt

Mar18 - 349.50 / 351.50

Apr18 - 349.00 / 351.00

May18 - 348.50 / 350.50

Jun18 - 347.50 / 349.50

Jul18 - 346.50 / 348.50

Aug18 - 345.25 / 347.25

Q2-18 - 348.50 / 350.50

Q3-18 - 346.00 / 348.00

Q4-18 - 341.75 / 344.25

Q1-19 - 334.75 / 337.25

CAL19 - 298.25 / 301.25

CAL20 - 223.25 / 228.25

Singapore 180 cSt

Mar18 - 356.00 / 358.00

Apr18 - 355.50 / 357.50

May18 - 355.00 / 357.00

Jun18 - 354.25 / 356.25

Jul18 - 353.25 / 355.25

Aug18 - 352.00 / 354.00

Q2-18 - 355.00 / 357.00

Q3-18 - 352.75 / 354.75

Q4-18 - 348.50 / 351.00

Q1-19 - 342.00 / 344.50

CAL19 - 307.50 / 310.50

CAL20 - 236.50 / 241.50

Rotterdam Barges

Mar18 336.00 / 338.00

Apr18 336.00 / 338.00

May18 335.25 / 337.25

Jun18 334.25 / 336.25

Jul18 333.00 / 335.00

Aug18 331.25 / 333.25

Q2-18 335.00 / 337.00

Q3-18 331.00 / 333.00

Q4-18 322.50 / 325.00

Q1-19 314.00 / 316.50

CAL19 275.50 / 278.50

CAL20 212.50 / 217.50

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

Image: Freight Investor Services (FIS) logo. Image credit: Freight Investor Services (FIS)

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