Oil and fuel oil hedging market update

Commentary

Brent closed up $0.86 last night to $59.30 and WTI closed at $52.64, up $0.46. Well, Brent is up 3.5% this week. Forwardddddd march! Up to $60, $70? Dare I say it, will $100 per bbl oil be on the most bullish of economists' forecasts soon? This market is brutal though. I mean, don't get me wrong, it is brilliant if you're a producer; they must be looking forward to next year's summer holidays already. But how is everyone else faring in this relentlessly bullish market? Trading margins seem so thin and there is no market structure to make anything work out further than 10 days, so perhaps next year it will be more of a greedy volume game as opposed to putting something in storage and relying on the market structure to do the work for you. Freight values seem to have gone a little haywire - even if the actual fixtures aren't there to back up the market's insatiable appetite for arbitrage spreads currently. Granted, new flat rates will be out soon and the fat cats at Worldscale are waiting to unleash 2018 numbers, so keep an eye over the next few weeks with an eye like Mad-Eye Moody.

Fuel Oil Market (October 26)

The front crack opened at -7.85, weakening to -8.05, during the Barges trading window. The Cal 18 was valued at -8.15.

Rising inventories in Singapore weighed on Asia's fuel oil crack, which slipped to a near two-week low but remained well within its recent trading range. The November 180 cSt fuel oil crack to Dubai crude narrowed to minus $2.41 a barrel, its narrowest discount since Oct. 10

Similarly, the November 180 cSt discount to Brent crude fell to $4.36 a barrel, its narrowest discount since Oct. 10.

Singapore's net exports of fuel oil to China topped the weekly list (279,000 tonnes); followed by Hong Kong (240,000 tonnes) and Indonesia (36,000 tonnes).

Largest Singapore net imports originated from Russia (527,000 tonnes); followed by the UAE (242,000 tonnes), Malaysia (214,000 tonnes), and Venezuela (146,000).

Economic Data/Events: (UK times)

* 7:45am: France consumer confidence for Oct., est. 101 (prior 101)

* 1:30pm: U.S. GDP annualized q/q for 3Q, advance, est. 2.6% (prior 3.1%)

* 3pm: U.S. University of Michigan sentiment for Oct., final, est. 100.7 (prior 101.1)

* 6pm: U.S. Baker Hughes weekly U.S. oil, gas rig counts

* 6pm: ICE weekly commitments of traders report

* 8:30pm: U.S. CFTC weekly commitments of traders report on futures and options contracts

** Africa oil week, final day

** Singapore International Energy Week, Day 5, including Nordic Green Dialogue

** Russia final Urals program for Nov.

** Earnings: Total, Eni SpA, Exxon Mobil, Chevron, Phillips 66, Imperial Oil

Singapore 380 cSt

Nov17 - 338.50 / 340.50

Dec17 - 337.25 / 339.25

Jan18 - 335.25 / 337.25

Feb18 - 333.75 / 335.75

Mar18 - 332.50 / 334.50

Apr18 - 331.25 / 333.25

Q1-18 - 334.00 / 336.00

Q2-18 - 330.00 / 332.00

Q3-18 - 325.75 / 328.25

Q4-18 - 321.75 / 324.25

CAL18 - 329.50 / 332.50

CAL19 - 298.50 / 303.50

CAL20 - 268.50 / 275.50

Singapore 180 cSt

Nov17 - 343.25 / 345.25

Dec17 - 342.25 / 344.25

Jan18 - 341.00 / 343.00

Feb18 - 340.25 / 342.25

Mar18 - 339.25 / 341.25

Apr18 - 338.25 / 340.25

Q1-18 - 340.25 / 342.25

Q2-18 - 336.75 / 338.75

Q3-18 - 332.50 / 335.00

Q4-18 - 329.50 / 332.00

CAL18 - 336.25 / 339.25

CAL19 - 307.25 / 312.25

CAL20 - 278.25 / 285.25

Rotterdam 380 cSt

Nov17 319.75 / 321.75

Dec17 316.25 / 318.25

Jan18 315.75 / 317.75

Feb18 315.50 / 317.50

Mar18 315.25 / 317.25

Apr18 314.75 / 316.75

Q1-18 315.50 / 317.50

Q2-18 314.00 / 316.00

Q3-18 309.50 / 312.00

Q4-18 302.25 / 304.75

CAL18 311.50 / 314.50

CAL19 278.50 / 283.50

CAL20 247.75 / 254.75


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		Auramarine to host webinar on ammonia as marine fuel in April Finnish firm will explore ammonia’s role in maritime decarbonisation at its third spring webinar.

		Green ammonia could reach cost parity with VLSFO and LNG by 2050, study finds WinGD and Envision Energy study projects green ammonia operational costs competitive with conventional marine fuels.

		Bureau Veritas verifies methane emissions on Brittany Ferries’ LNG vessels Verification enables ferry operator to report measured methane slip instead of regulatory default values.

		Alliance calls for urgent black carbon action as new Arctic emission control areas take effect Canadian Arctic and Norwegian Sea ECAs now in force, with compliance deadline set for March 2027.

		Lloyd’s Register to class Western Australia’s first electric ferry fleet Echo Marine Group partners with Lloyd’s Register on five battery-electric ferries for Perth’s Swan River.

		ICS condemns Middle East shipping attacks as 20,000 seafarers remain trapped Industry body calls for urgent state action to resupply vessels and enable crew changes.

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Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.

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