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Thu 11 Jan 2018 09:24

Oil and fuel oil hedging market update


By the Oil Desk at Freight Investor Services.

Commentary

Brent closed up $0.38 to $69.20, WTI closed at $63.57 up $0.61. So the EIA showed a draw on crude. Great. Five weeks of draws and the market sees this as a positive step that the market is rebalancing. Hold on there, Nessie. Since December 1st, we have seen draws on US crude of approx 34.155mn bbls. Wonderful. But, since December 1st, we have seen product builds (gasoline and dists) of 38.489mn bbls. !!!! Refineries are running at record levels and the crude isn't actually going anywhere! In fact, we have seen a net increase on crude and oil products of 4.334 mn bbls! I honestly just don't get it. How can these numbers be ignored? Let's add some other harsh realities that are being awkwardly ignored like when you see an ex in a supermarket you really, really don't want to speak to: Es Sider pipeline down - now fixed apparently. Forties pipeline went down - now fixed. US oil production at 10mn bpd and EIA predict it will be at 11mn bbls a day. Yet here we are, flirting with $70 per bbl. I need to get a job with the OPEC PR team. They know how to get things done.

Fuel Oil Market (January 10)

The front crack opened at -11.15, weakening to -11.40, strengthening to -10.95, ending -11.15. The Cal 19 was valued at -11.80.

Oil-Strong selling interest drags spreads and cracks lower. Concerns of ample prompt supplies of fuel oil coupled with sluggish demand saw selling pressure mount, sending time spreads and refining margins of Asian fuel oil lower albeit thin trading volumes as buyer stayed clear. Rising crude oil prices, which hit their highest in more than three years on Wednesday, also helped weigh on the frontmonth fuel oil crack, sending it to its lowest since November 2016.

Fujairah fuel oil inventories rose 5 percent, or 448,000 barrels (about 67,000 tonnes), from a week ago to a twoweek high of 9.074 million barrels (1.354 million tonnes)in the week ended Jan. 8.

India's fuel oil demand was 10.1 percent lower in December compared with the same month last year.

Economic Data and Events

* 1:30pm: U.S. PPI Final Demand, Dec.

* 1:30pm: U.S. Initial Jobless Claims, Jan. 6

* 1:30pm: U.S. Continuing Claims, Dec. 30

* 2:45pm: Bloomberg Consumer Comfort, Jan. 7

Singapore 380 cSt

Feb18 - 376.25 / 378.25

Mar18 - 376.75 / 378.75

Apr18 - 377.00 / 379.00

May18 - 377.00 / 379.00

Jun18 - 376.75 / 378.75

Jul18 - 376.25 / 378.25

Q2-18 - 376.75 / 378.75

Q3-18 - 375.25 / 377.25

Q4-18 - 371.50 / 374.00

Q1-19 - 364.50 / 367.00

CAL19 - 342.50 / 345.50

CAL20 - 291.00 / 296.00

Singapore 180 cSt

Feb18 - 380.75 / 382.75

Mar18 - 381.75 / 383.75

Apr18 - 382.00 / 384.00

May18 - 382.25 / 384.25

Jun18 - 382.00 / 384.00

Jul18 - 381.75 / 383.75

Q2-18 - 382.00 / 384.00

Q3-18 - 380.75 / 382.75

Q4-18 - 377.50 / 380.00

Q1-19 - 372.25 / 374.75

CAL19 - 351.00 / 354.00

CAL20 - 300.00 / 305.00

Rotterdam Barges

Feb18 364.00 / 366.00

Mar18 365.00 / 367.00

Apr18 365.75 / 367.75

May18 365.75 / 367.75

Jun18 365.50 / 367.50

Jul18 364.50 / 366.50

Q2-18 365.50 / 367.50

Q3-18 362.50 / 364.50

Q4-18 354.75 / 357.25

Q1-19 347.50 / 350.00

CAL19 322.00 / 325.00

CAL20 271.00 / 276.00

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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