Thu 15 Mar 2018 09:37

Oil and fuel oil hedging market update


By the Oil Desk at Freight Investor Services.



Commentary

Brent closed last night at $64.89 up $0.25, WTI closed up $0.25 to $60.96. Yesterday, the OPEC report wasn't particularly encouraging if you're a bull, but, again, it was ignored like in the same awkward way as when someone accidentally passes wind in a busy elevator. The IEA report is out today and this should give us more of an idea on where demand actually is. What is obvious though is that, once again, there is an increasing amount of oil. So even if demand forecasts are increased, there is an increasing concern that it still won't be enough to absorb all the black stuff we have floating around. Breaking news! EIA reported a build in crude oil inventories - which should come as no surprise to anyone seeing how US crude oil production is soaring. However, product draws meant that the gas cracks would have roofed, so at least something salvageable. How did crude react to yet another week of builds and soaring production, I hear you ask? Well, taking into account the product draws, the market was as indecisive as recovering alcoholic sitting in a pub after having seen an M Night Shyamalan film (eg. Signs) on a good deal of unidentifiable pills. It is clear for all to see that US oil production is going to have a serious effect on the demand/supply balance, but the elephant in the room to me is Venezuela. There is no way that when OPEC met in Nov 2016, they would have assumed that Venezuelan oil production would drop by approx 1mn bpd to now. I am still sceptical they are even producing that much to be honest, but if they weren't in such turmoil then this market really would be up the creek. Alas, circumstances Dear Watson, the devil is in the detail.

Fuel Oil Market (March 14)

The front crack opened at -9.95, weakening to -10.30, before strengthening to -10.15, closing at -10.30. The Cal 19 was valued at -14.90.

Asia's prompt-month viscosity spread extended its losses on Wednesday for a second straight session, slipping further away from Monday's 10-month high.

The March viscosity spread, the price differential between March 180 cSt and 380 cSt fuel oil swaps, settled at $7.75 a tonne on Wednesday, down from $8.25 on Tuesday and a multi-month high of $8.50 a tonne on Monday

South Korea's move to shut coal-fired generators to control air pollution at the same time as nuclear reactors are going into scheduled maintenance is resulting in surging fuel oil imports, as utilities burn the dirty feedstock to meet power demand.

Fujairah fuel oil inventories climbed for a second week straight, rising 13% to an eight-week high of 7.355 million barrels (about 1.097 million tonnes) in the week to March 12

Economic Data and Events

* 8am: Singapore onshore oil-product stockpile data

* 9am: IEA monthly Oil Market Report

* 12:30pm: U.S. Initial Jobless Claims, March 10

* 12:30pm: U.S. Continuing Claims, March 3

* 1:45pm: Bloomberg Consumer Comfort, March 11

Singapore 380 cSt

Apr18 - 356.25 / 358.25

May18 - 355.50 / 357.50

Jun18 - 354.50 / 356.50

Jul18 - 353.00 / 355.00

Aug18 - 351.00 / 353.00

Sep18 - 349.00 / 351.00

Q2-18 - 355.50 / 357.50

Q3-18 - 351.50 / 353.50

Q4-18 - 344.75 / 347.25

Q1-19 - 336.25 / 338.75

CAL19 - 309.00 / 313.00

CAL20 - 246.00 / 254.00

Singapore 180 cSt

Apr18 - 364.00 / 366.00

May18 - 363.25 / 365.25

Jun18 - 362.25 / 364.25

Jul18 - 361.00 / 363.00

Aug18 - 359.25 / 361.25

Sep18 - 357.25 / 359.25

Q2-18 - 363.25 / 365.25

Q3-18 - 359.25 / 361.25

Q4-18 - 352.75 / 355.25

Q1-19 - 344.75 / 347.25

CAL19 - 322.25 / 326.25

CAL20 - 270.00 / 278.00

Rotterdam Barges

Apr18 343.75 / 345.75

May18 343.00 / 345.00

Jun18 341.75 / 343.75

Jul18 340.00 / 342.00

Aug18 338.00 / 340.00

Sep18 335.25 / 337.25

Q2-18 343.00 / 345.00

Q3-18 338.00 / 340.00

Q4-18 328.50 / 331.00

Q1-19 320.75 / 323.25

CAL19 289.50 / 293.50

CAL20 234.50 / 242.50


Lease agreement between Inter Terminals Sweden and the Port of Gothenburg, signed on July 1st. Pictured: Göran Eriksson, CEO of the Port of Gothenburg (left) and Johan Zettergren, Managing Director of Inter Terminals Sweden (right). New Gothenburg lease an opportunity to expand green portfolio: Inter Terminals  

Bunker terminal operator eyes tank conversion and construction projects for renewable products.

Map of US Gulf. Peninsula extends US Gulf operation offshore  

Supplier to focus on Galveston Offshore Lightering Area (GOLA) in strategy to serve growing client base.

The M/T Jutlandia Swan, operated by Uni-Tankers. Uni-Tankers vessel gets wind-assisted propulsion  

Fourth tanker sails with VentoFoil units as manufacturer says suction wing technology is gaining traction.

Port of Gothenburg Energy Port. Swedish biomethane bunkered in Gothenburg  

Test delivery performed by St1 and St1 Biokraft, who aim to become large-scale suppliers.

Image from Cockett Marine Oil presentation. Cockett to be closed down after 45 years  

End of an era as shareholders make decision based on 'non-core nature' of Cockett's business.

Petrobras logo. Petrobras confirms prompt availability of VLS B24 at Rio Grande  

Lead time for barge deliveries currently five days.

Opening of the IMO Marine Environment Protection Committee (MEPC), 83rd Session, April 7, 2025. IMO approves pricing mechanism based on GHG intensity thresholds  

Charges to be levied on ships that do not meet yearly GHG fuel intensity reduction targets.

Preemraff Göteborg, Preem's wholly owned refinery in Gothenburg, Sweden. VARO Energy expands renewable portfolio with Preem acquisition  

All-cash transaction expected to complete in the latter half of 2025.

Pictured: Biofuel is supplied to NYK Line's Noshiro Maru. The vessel tested biofuel for Tohoku Electric Power in a landmark first for Japan. NYK trials biofuel in milestone coal carrier test  

Vessel is used to test biofuel for domestic utility company.

Pictured (from left): H-Line Shipping CEO Seo Myungdeuk and HJSC CEO Yoo Sang-cheol at the contract signing ceremony for the construction of an 18,000-cbm LNG bunkering vessel. H-Line Shipping orders LNG bunkering vessel  

Vessel with 18,000-cbm capacity to run on both LNG and MDO.


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