Thu 4 Jan 2018 09:07

Oil and fuel oil hedging market update


By the Oil Desk at Freight Investor Services.



Commentary

Brent closed last night up $1.27 to $67.84, WTI closed at $61.63, up $1.26. Well, 2018 has started positively for crude, hasn't it? Since Dec 27, WTI is up nearly 5%. Technicals predicted a further bullish move with a move above $67.29, and it sure did move up as thought. Also, the situation in Iran is causing people to get a little flustered, even though it hasn't affected Iranian production, yet. The market is jumping on any bullish news regardless if there is any logic around it or if it makes sense. One thing, though, that is interesting is that the front Brent crude spread has rallied around 15c in the last few days and the Singapore fuel oil market has flipped into contango for the front two months. What does this signal? Well, if Brent spreads are backwardated - meaning the next Brent month swap is cheaper but the end user market in Singapore is higher as that is in contango, is it to be a good year for the product trading market? I think a lot of people will certainly be hoping so. It will be interesting to see how this pans out. One other thing that is interesting, is the correlation between the Schlumberger stock price (Schlumberger are the world's largest oil field services provider) and the price of WTI. The two are correlated to the tune of about 0.61. So it is clear that oil services companies are indeed benefiting from the rise in crude oil prices. Could it be that these guys are the ones buying the paper market to keep not only the oil price but the equity market at yearly record highs? Answers on a postcard. Stats later.

Fuel Oil Market (January 3)

The front crack opened at -9.30, strengthening to -9.15, before weakening to -9.55. The Cal 19 was valued at -11.35.

The front-month E-W arbitrage spread was at its narrowest since Sept. 15 on Wednesday amid expectations of ample fuel oil flows into Singapore inJanuary and February.

This came as fuel oil inventories In the Fujairah oil hub fell to a seven-week low as suppliers there shipped more of the residual fuel to Asia amid slow Middle Eastern demand.

Fujairah fuel oil inventories fell 16%, or 1.661 million barrels (about 248,000 tonnes), from a week ago to 8.626 million barrels (1.287 million tonnes) in the week ended Jan. 1.

Over the past year, weekly Fujairah inventories have averaged 10.359 million barrels (or 1.546 million tonnes) since records began in Jan 2017.

Economic Data and Events

* EIA weekly U.S. oil inventory report, 4pm; TOPLive blog coverage begins 3:50pm. (1 day later than usual)

Singapore 380 cSt

Feb18 - 376.75 / 378.75

Mar18 - 377.00 / 379.00

Apr18 - 377.00 / 379.00

May18 - 376.75 / 378.75

Jun18 - 376.25 / 378.25

Jul18 - 375.00 / 377.00

Q2-18 - 376.75 / 378.75

Q3-18 - 374.00 / 376.00

Q4-18 - 369.50 / 372.00

Q1-19 - 361.75 / 364.25

CAL19 - 338.75 / 341.75

CAL20 - 288.75 / 293.75

Singapore 180 cSt

Feb18 - 380.50 / 382.50

Mar18 - 381.50 / 383.50

Apr18 - 381.50 / 383.50

May18 - 381.50 / 383.50

Jun18 - 381.50 / 383.50

Jul18 - 380.50 / 382.50

Q2-18 - 381.50 / 383.50

Q3-18 - 379.50 / 381.50

Q4-18 - 375.50 / 378.00

Q1-19 - 369.50 / 372.00

CAL19 - 347.25 / 350.25

CAL20 - 297.50 / 302.50

Rotterdam Barges

Feb18 364.00 / 366.00

Mar18 364.25 / 366.25

Apr18 364.00 / 366.00

May18 363.50 / 365.50

Jun18 362.50 / 364.50

Jul18 361.00 / 363.00

Q2-18 363.50 / 365.50

Q3-18 359.50 / 361.50

Q4-18 351.00 / 353.50

Q1-19 343.00 / 345.50

CAL19 318.25 / 321.25

CAL20 269.25 / 274.25



Lease agreement between Inter Terminals Sweden and the Port of Gothenburg, signed on July 1st. Pictured: Göran Eriksson, CEO of the Port of Gothenburg (left) and Johan Zettergren, Managing Director of Inter Terminals Sweden (right). New Gothenburg lease an opportunity to expand green portfolio: Inter Terminals  

Bunker terminal operator eyes tank conversion and construction projects for renewable products.

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.


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