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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

By the Oil Desk at Freight Investor Services.



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


Updated on 09 Aug 2018 10:13 GMT

Commentary

So if you read a normal morning report, it would probably say something like: "Despite the imposing of sanctions on Iran by the U.S. this has not done enough to offset other factors in the market. The market is sure to have built in a decent premium into prices for the sanctions, but as the escalating trade war between the U.S. and China, and now as of last night U.S. sanctions on Russia on the nerve agent poisonings in the UK, world demand looks like it may take a hit due to new tariffs on oil." Yep, yawn... I'm boring myself. A much more exciting way to look at it is: Protectionist imposes punitive economic sanctions and tries to bully other countries into also totally cutting off Iran. It has also taken aim at China in a tariff war. Well yesssss, China will of course sell more to you as the workshop of the world you allowed it to be. So by imposing sanctions, prices go up, by imposing tariffs demand goes down and prices go down. But then they get annoyed with higher gasoline prices and attack OPEC. So all in all, this market is in a "I don't know" phase where it reacts off any hint of news. This does explain a bit the wide nature of spreads and cracks for the fuel market... people just don't know. Much more exciting to write and read. Good day.

Fuel Oil Market (Aug 8)

The front crack opened at -8.50, weakening to -8.60, before strengthening to -8.40. The Cal 19 was valued at -14.25.

Time spreads and refining margins of 380 cSt fuel oil firmed, despite limited trade activity, clawing back losses in the previous session.

This came as Singapore's weekly onshore fuel oil inventories fell for a third straight week to a more than nine-year low of 14.348 million barrels, or about 2.141 million tonnes, in the week ended Aug. 7. Time spreads of 380 cSt fuel oil for Sept/Oct bounced back to a premium of about $5.50 a tonne on Wednesday after slipping to a near three-week low of $5 a tonne on Tuesday, broker sources said.

The Sept 380 cSt barge crack to Brent crude was also slightly higher at about minus $8.45 a barrel, from minus $8.60 a barrel on Tuesday. Prospects of fresh arbitrage supplies into Singapore this week weighed on market as traders anticipated supply shortages in the city state may soon begin to ease.

Economic data/events (Times are London.)

* 1:30pm: U.S. initial jobless claims for Aug. 4, est. 220k (prior 218k)

* 1:30pm: U.S. PPI final demand m/m for July, est. 0.2% (prior 0.3%)

* 1:30pm: U.S. continuing claims for July 28, est. 1730k, (prior 1724k)

* 3pm: U.S. wholesale inventories m/m for June F, est. 0% (prior 0%)

* Today: Russian refining maintenance schedule from ministry

Singapore 380 cSt

Sep18 - 426.50 / 428.50

Oct18 - 420.75 / 422.75

Nov18 - 417.00 / 419.00

Dec18 - 413.75 / 415.75

Jan19 - 410.50 / 412.50

Feb19 - 407.50 / 409.50

Q4-18 - 417.25 / 419.25

Q1-19 - 407.75 / 409.75

Q2-19 - 398.25 / 400.75

Q3-19 - 381.25 / 383.75

CAL19 - 382.75 / 385.75

CAL20 - 312.50 / 318.50

Singapore 180 cSt

Sep18 - 434.25 / 436.25

Oct18 - 430.25 / 432.25

Nov18 - 427.00 / 429.00

Dec18 - 424.00 / 426.00

Jan19 - 421.50 / 423.50

Feb19 - 418.50 / 420.50

Q4-18 - 427.25 / 429.25

Q1-19 - 418.75 / 420.75

Q2-19 - 410.75 / 413.25

Q3-19 - 397.75 / 400.25

CAL19 - 398.00 / 401.00

CAL20 - 332.50 / 338.50

Rotterdam 3.5%

Sep18 - 405.00 / 407.00

Oct18 - 400.00 / 402.00

Nov18 - 396.25 / 398.25

Dec18 - 392.75 / 394.75

Jan19 - 390.50 / 392.50

Feb19 - 388.25 / 390.25

Q4-18 - 396.25 / 398.25

Q1-19 - 388.00 / 390.00

Q2-19 - 379.00 / 381.50

Q3-19 - 358.00 / 360.50

CAL19 - 361.25 / 364.25

CAL20 - 295.75 / 301.75



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.






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

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