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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.



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


Updated on 15 May 2018 08:34 GMT

Commentary

Oil prices were stable this morning as ongoing production cuts by OPEC and looming U.S. sanctions against Iran threatened to tighten the market amid signs of ongoing strong demand. Brent crude futures, were at $78.21 per barrel at 0639 GMT, virtually unchanged from their last close and not far off a three-and-a-half year high of $78.53 a barrel reached the previous session. U.S. West Texas Intermediate (WTI) crude futures were at $70.88 a barrel, down 8 cents, though still not far off their Nov. 2014 high of $71.89 a barrel reached last week.

U.S. crude prices are at the steep discount to Brent as a more than 25 percent rise in U.S. crude production to $10.7 million barrels per day has left the American market well supplied. International markets have tightened as OPEC, led by Saudi Arabia, has been withholding supplies since 2017 in order to push up oil prices. With renewed U.S. sanctions looming against OPEC-member Iran, analysts said crude prices were well supported. "The commitment of Saudi Arabia and the rest of OPEC to the production cuts is a major factor in supporting the price at the moment as well as the possibility of reduced exports from Iran due to sanctions," said analysts. The OPEC cuts and looming sanctions come amid strong demand.

In China, the world's biggest oil importer, refinery runs rose nearly 12 percent in April compared with the same month a year ago, to around $12.06 million barrels per day, marking the second-highest level on record on a daily basis, data showed on Tuesday. The tightening market has all but eliminated a global supply overhang which depressed crude prices between late 2014 and early 2017. OPEC figures published on Monday showed that oil inventories in OECD industrialised nations in March fell to 9 million barrels above the five-year average, down from 340 million barrels above the average in January 2017.

Fuel Oil Market (May 14)

After posting steady gains in the previous week, the front-month fuel oil crack shed early gains on Monday. The June 380 cSt fuel oil crack to Brent crude was trading at a discount of about $12 a barrel after climbing as high as $11.70 a barrel earlier in the session,before weakening to -12.50. The Cal 19 traded at -18.20 and valued weaker at - 18.35. Singapore marine fuel sales climbed to a three-month high of 4.233 million tonnes in April, up 1.6 percent from the previous month, but 0.5 percent lower compared with a year ago, data from the Maritime and Port Authority of Singapore (MPA) showed on Monday. German container shipping line Hapag-Lloyd reported a higher net profit and operating result in the first quarter of 2018 on Monday, citing better transport volumes, but added that rising ship fuel prices was a cause of concern.

Economic Data and Events: (Times are London.)

* 9:30pm: API issues weekly U.S. oil inventory report

* Chinese Vice Premier Liu He plans to visit Washington and continue trade talks with Treasury Secretary Steve Mnuchin

* APPEA Oil & Gas Conference and Exhibition in Adelaide, 2nd day of 4

* Bloomberg-compiled Refinery Snapshot for U.S. and Canada; gives offline capacity projections for crude units and FCCs

* North Dakota oil production for May

* Russia 5-day crude oil loading program

* See OIL WEEKLY AGENDA for this week's events

Singapore 380 cSt

Jun18 - 430.50 / 432.50

Jul18 - 427.25 / 429.25

Aug18 - 424.00 / 426.00

Sep18 - 420.50 / 422.50

Oct18 - 417.50 / 419.50

Nov18 - 414.25 / 416.25

Q3-18 - 423.75 / 425.75

Q4-18 - 414.00 / 416.00

Q1-19 - 402.50 / 405.00

Q2-19 - 392.00 / 394.50

CAL19 - 359.25 / 362.25

CAL20 - 293.75 / 298.75

Singapore 180 cSt

Jun18 - 439.75 / 441.75

Jul18 - 437.25 / 439.25

Aug18 - 434.00 / 436.00

Sep18 - 430.75 / 432.75

Oct18 - 428.00 / 430.00

Nov18 - 424.75 / 426.75

Q3-18 - 434.00 / 436.00

Q4-18 - 424.50 / 426.50

Q1-19 - 413.50 / 416.00

Q2-19 - 403.25 / 405.75

CAL19 - 373.75 / 376.75

CAL20 - 317.75 / 322.75

Rotterdam Barges

Jun18 - 416.00 / 418.00

Jul18 - 413.25 / 415.25

Aug18 - 409.75 / 411.75

Sep18 - 405.75 / 407.75

Oct18 - 401.25 / 403.25

Nov18 - 397.00 / 399.00

Q3-18 - 409.50 / 411.50

Q4-18 - 396.75 / 398.75

Q1-19 - 384.50 / 387.00

Q2-19 - 367.50 / 370.00

CAL19 - 337.75 / 340.75

CAL20 - 261.00 / 266.00



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 the company on +44 20 7090 1120.






Related Links:

Oil and fuel oil hedging market update
Freight Investor Services Ltd.

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