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Fri 10 Nov 2017, 09:37 GMT

Oil and fuel oil hedging market update


By the Oil Desk at Freight Investor Services.

Commentary

Brent closed $0.44 up last night to $63.93 and WTI closed at $57.17, up $0.36. What has the week bought us? Well, another week and another rise. Brent is up 5% and WTI is up 4.6%. Nice. I can't help but feel though that the rally is coming to an end. I feel like it has got ahead of itself and it knows it has made a mistake but refuses to acknowledge it. ARA stocks are up, US stocks are up, granted Singapore and Fujairah stocks have nominally shrunk this week but it is clear that the world is awash with oil. US crude oil production and exports are at record highs. OPEC have declared that demand won't be as strong as they forecast for the next two years. And to top it all off, Goldman's claim that floating storage demand has halved since June. Mmm, it doesn't take a rocket scientist to work out that with a market structure that is steep in backwardation you don't want to hold oil in storage for long. Increased demand. Whatevs.

Fuel Oil Market (November 9)

The front crack opened at -8.00, strengthening to -7.90, before weakening to -7.95. The Cal 18 was valued at -7.75.

Cash premiums for Asia's 380 cSt high-sulphur fuel oil cargoes slipped to a near one-month low on Thursday amid lower deal values and weaker offers when compared with the previous session.

This came as Singapore onshore fuel oil inventories snapped four weeks of builds, falling 8.1 percent, or 309,000 tonnes, from previous week to a total of 3.53 million tonnes in the week to Nov. 8. The decline in inventories over the past week was the largest volume change in weekly stocks since the week to Sept. 13, when inventories fell 449,000 tonnes.

Weekly net imports into Singapore were down 18.6 percent from a week earlier to 0.72 million tonnes - a four-week low. Despite the inventory decline, current fuel oil stocks are 12.7% higher year-on-year.

Economic Data/Events: (UK times)

Singapore 380 cSt

Dec17 - 372.25 / 374.25

Jan18 - 370.75 / 372.75

Feb18 - 369.25 / 371.25

Mar18 - 367.75 / 369.75

Apr18 - 366.25 / 368.25

May18 - 364.75 / 366.75

Q1-18 - 369.25 / 371.25

Q2-18 - 364.75 / 366.75

Q3-18 - 359.50 / 362.00

Q4-18 - 354.00 / 356.50

CAL18 - 361.25 / 364.25

CAL19 - 323.75 / 328.75

Singapore 180 cSt

Dec17 - 376.75 / 378.75

Jan18 - 375.75 / 377.75

Feb18 - 374.75 / 376.75

Mar18 - 373.75 / 375.75

Apr18 - 372.50 / 374.50

May18 - 371.50 / 373.50

Q1-18 - 374.75 / 376.75

Q2-18 - 370.75 / 372.75

Q3-18 - 366.25 / 368.75

Q4-18 - 360.75 / 363.25

CAL18 - 367.50 / 370.50

CAL19 - 332.50 / 337.50

Rotterdam 380 cSt

Dec17 353.75 / 355.75

Jan18 352.50 / 354.50

Feb18 351.75 / 353.75

Mar18 351.00 / 353.00

Apr18 350.00 / 352.00

May18 349.00 / 351.00

Q1-18 351.75 / 353.75

Q2-18 349.00 / 351.00

Q3-18 343.50 / 346.00

Q4-18 335.00 / 337.50

CAL18 343.50 / 346.50

CAL19 301.50 / 306.50

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