Oil and fuel oil hedging market update

Brent closed up $0.13 last night to $60.62 and WTI closed at $54.54, up $0.24. Well, once again, it's all rather rosy. Brent is up 2% on the week. On the month it's up 7.5% and on the year it is up 16%. I'm sure everyone who is at OPEC is giving themselves a massive pat on the back. The question is: will these levels be able to sustain themselves? Well, let's talk about that, shall we? Let's have OPEC in the Brent corner and the USA in the WTI corner for a second. OPEC production has been capped and Brent has risen 16% since that magical meeting. US production has risen by about 1.1mn bpd and prices have risen about 10% on WTI. So let me ask you this my fellow oilanauts, which one has the ability to maintain higher prices and higher production? I fear that the start of my commentary will soon lead with the price of WTI and not Brent. Has Brent had its day as the global benchmark? Perhaps not, perhaps it's even irrelevant, but let me tell you this: China have ramped up crude purchases in 2017 by 13% so far. The US are exporting more and more and are now starting to sell to the Chinese. The Middle East (OPEC really) has seen a sizeable drop in the number of cargoes purchased by China. Apparently, demand is increasing but pfff to that, this "increased demand" is nothing, but buyers making hay whilst WTI is $6 cheaper than Brent. Doesn't take a rocket scientist to work that out, does it? I wish you all a wonderful weekend.

Fuel Oil Market (November 2)

The front crack opened at -7.40, weakening to -7.50, strengthening to -7.45, ending the day at -7.55. The Cal 18 was valued at -7.55.

Asia's front-month East-West arbitrage spread slipped to a near-three week low on Thursday as Singapore onshore inventories of the industrial fuel climbed to an eight-week high.

The December arbitrage spread was also weighed down by recent strength in the Rotterdam market relative to Singapore, making fuel oil imports into Singapore from the European oil hub less economical, sources said.

Singapore inventories rose for a fourth straight week, up 2.5%, or 94,000 tonnes, from the previous week to 3.84 million tonnes in the week to Nov. 1. Weekly net imports into Singapore were down 31% from a week earlier to 0.88 million tonnes, a three-week low. Fuel oil stocks are now 12.6% higher year on year.

Economic Data/Events: (UK times)

* 12:30pm: U.S.

** Change in nonfarm payrolls for Oct., est. 313k (prior -33k)

** Unemployment rate for Oct., est. 4.2% (prior 4.2%)

** Trade balance for Sept., est. -$43.2b (prior -$42.4b)

* 2pm: U.S.

** Factory orders for Sept., est. 1.2% (prior 1.2%)

** Durable goods orders for Sept., final, est. 2% (prior 2.2%)

* 5pm: U.S. Baker Hughes weekly oil, gas rig counts

* 6pm: ICE weekly commitments of traders report for Brent, gasoil

* 7:30pm: U.S. CFTC weekly commitments of traders report on futures and options contracts

Singapore 380 cSt

Dec17 - 355.50 / 357.50

Jan18 - 353.25 / 355.25

Feb18 - 351.50 / 353.50

Mar18 - 349.75 / 351.75

Apr18 - 348.25 / 350.25

May18 - 346.75 / 348.75

Q1-18 - 351.50 / 353.50

Q2-18 - 346.75 / 348.75

Q3-18 - 341.25 / 343.75

Q4-18 - 336.00 / 338.50

CAL18 - 343.00 / 346.00

CAL19 - 307.75 / 312.75

Singapore 180 cSt

Dec17 - 360.25 / 362.25

Jan18 - 358.75 / 360.75

Feb18 - 357.00 / 359.00

Mar18 - 355.75 / 357.75

Apr18 - 354.75 / 356.75

May18 - 353.50 / 355.50

Q1-18 - 357.25 / 359.25

Q2-18 - 353.25 / 355.25

Q3-18 - 347.75 / 350.25

Q4-18 - 343.50 / 346.00

CAL18 - 349.75 / 352.75

CAL19 - 316.75 / 321.75

Rotterdam 380 cSt

Dec17 335.00 / 337.00

Jan18 333.00 / 335.00

Feb18 332.00 / 334.00

Mar18 331.00 / 333.00

Apr18 330.00 / 332.00

May18 328.75 / 330.75

Q1-18 332.00 / 334.00

Q2-18 329.00 / 331.00

Q3-18 323.50 / 326.00

Q4-18 315.25 / 317.75

CAL18 325.00 / 328.00

CAL19 286.00 / 291.00


		Christiania Energy relocates headquarters within Odense Harbour Bunker firm moves to larger waterfront office to accommodate growing team and collaboration needs.

		HD Hyundai Heavy Industries receives design approval for 20,000-cbm LNG bunkering vessel Bureau Veritas grants approval in principle following joint development project with South Korean shipbuilder.

		Peninsula outlines dual role in FuelEU Maritime compliance at Lloyd’s Register panel Marine fuel supplier discusses challenges for shipowners and opportunities for suppliers under new regulation.

		LNG-fuelled container ships dominate January alternative-fuel vessel orders Container ships accounted for 16 of 20 alternative-fuelled vessels ordered in January, DNV reports.

		GCMD and CIMAC sign partnership to advance alternative marine fuel readiness Two-year agreement aims to bridge operational experience with technical standards for decarbonisation solutions.

		Renewable methanol project pipeline reaches 58.2m tonnes by 2031, GENA reports Project Navigator Methanol tracks 275 projects, including e-methanol, biomethanol and low-carbon methanol facilities globally.

		Petrobras adjusts bunker pricing and minimum order volumes at Santos Brazilian supplier discontinues volume discount tier and lowers minimum order quantity from 1 March.

		Viking Line secures biogas supply for 2026 after tenfold increase in biofuel use Åland-based ferry operator aims to maintain 50% biogas blend throughout the year on two vessels.

		GNV takes delivery of second LNG-powered vessel Aurora from Chinese shipyard Vessel to enter service on Genoa–Palermo route in April, completing first fleet renewal phase.

		Maersk takes delivery of first methanol-capable vessel in 9,000-teu series Tangier Maersk is the first of six mid-size container ships with methanol-capable dual-fuel engines.

Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.

Recommended