Mon 6 Nov 2017 09:28

Oil and fuel oil hedging market update


By the Oil Desk at Freight Investor Services.



Brent closed up $1.45 on Friday to $62.07 and WTI closed at $55.64, up $1.10. Wow, I can't keep up. Bulls everywhere, it's like being in Pamplona. But how much longer will it last? Well, judging by the ferocity of this climb over the last month it really is anyone's guess. The last month we have seen a 11% rise on Brent. From the same time a year ago, the price of WTI crude has climbed 25%, while Brent has jumped by 34%. Nice. What is actually causing this rally though? A drop in US oil rigs? Well yes, they dropped last week but they are up 329 from a year prior. US oil production is now 9.5mn bpd, 1mnbpd higher than last year. Demand? Well, yes, China's oil demand has increased owing to a rise in SPR buying, but overall product demand is pretty negligible year on year. Stocks being drawn? Well fuel oil stocks in ARA are up 137% since last year. 137%!! I really don't know actually why we are rallying. And I'm not sure Goldman's do either. Goldman's attribute the current rally to something rather mundane. Cycles. And not one of those new fancy carbon fibre road-going cycles. A "maturing business cycle". I can see us very quickly turning in to a technical market, one which is devoid of any emotion or fundamental driven headlines. Watch the critical support and resistance points with caution.

Fuel Oil Market (November 3)

The front crack opened at -7.55, weakening to -7.60, before strengthening to -7.50. The Cal 18 was valued at -7.55.

Cash premiums for Asia's 380-cst high-sulphur fuel oil cargoes rose to a near one-month high on Friday amid higher deal values when compared to the previous session. Bids for 380-cst fuel oil cargoes were higher relative to Thursday in the Platts windowbut still failed to attract many suppliers, keeping traded volumes of physical fuel oil low on Friday

Meanwhile, the front-month 180-cst fuel oil crack to Dubai crude widened its discount further from a near sixweek high seen on Wednesday as rising inventories in key storage hubs weighed. Fuel oil stocks in ARA oil hub rose for a second straight week, up 2%, or 22,000 tonnes, to 1.356 million tonnes in the week to Nov. 2. Compared to last year, ARA inventories are up 137% and are well above the five-year average of 851,000 tonnes for this time of year.

Economic Data/Events: (UK times)

* New York Fed Executive Vice President Simon Potter speaks at a closed-press ECB workshop on Implementing Monetary Policy with the Balance Sheet, Frankfurt

* Bloomberg forecast of U.S. waterborne LPG exports

* Bloomberg proprietary forecast of Cushing crude inventory change plus weekly analyst survey of crude, gasoline, distillates inventories before Wednesday EIA report

* Platts gasoline, naphtha and LPG conference, Rotterdam, 1st day of 2

Singapore 380 cSt

Dec17 - 365.75 / 367.75

Jan18 - 363.50 / 365.50

Feb18 - 361.50 / 363.50

Mar18 - 359.75 / 361.75

Apr18 - 358.00 / 360.00

May18 - 356.50 / 358.50

Q1-18 - 361.50 / 363.50

Q2-18 - 356.25 / 358.25

Q3-18 - 350.25 / 352.75

Q4-18 - 344.25 / 346.75

CAL18 - 352.00 / 355.00

CAL19 - 316.75 / 321.75

Singapore 180 cSt

Dec17 - 370.50 / 372.50

Jan18 - 369.00 / 371.00

Feb18 - 367.00 / 369.00

Mar18 - 365.75 / 367.75

Apr18 - 364.50 / 366.50

May18 - 363.25 / 365.25

Q1-18 - 367.25 / 369.25

Q2-18 - 362.75 / 364.75

Q3-18 - 356.75 / 359.25

Q4-18 - 351.75 / 354.25

CAL18 - 358.75 / 361.75

CAL19 - 325.75 / 330.75

Rotterdam 380 cSt

Dec17 345.25 / 347.25

Jan18 343.25 / 345.25

Feb18 342.25 / 344.25

Mar18 341.25 / 343.25

Apr18 340.25 / 342.25

May18 339.00 / 341.00

Q1-18 342.25 / 344.25

Q2-18 339.00 / 341.00

Q3-18 333.50 / 336.00

Q4-18 324.75 / 327.25

CAL18 334.00 / 337.00

CAL19 295.00 / 300.00


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.

Stanley George, VPS Group Technical and Science Manager, VPS. How to engineer and manage green shipping fuels | Stanley George, VPS  

Effective management strategies and insights for evolving fuel use.


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