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Mon 17 Sep 2018, 09:06 GMT

Oil and fuel oil hedging market update


By the Oil Desk at Freight Investor Services.

Image credit: Freight Investor Services (FIS)
Commentary

Today's oil prices are flat this morning on concerns additional US tariffs would be placed on Chinese imports, after an earlier rally triggered by worries that more sanctions on Iran might constrict supply. Crude futures ended the week up more than 1.6% as the early rally on Friday was sparked by reports US Secretary of State Michael Pompeo was going to announce new sanctions on Iran. The gains were curbed, though, by reports US President Donald Trump instructed aides to proceed with tariffs on about $US200 billion more of Chinese products.

Fuel Oil Market (Sep 14)

The front crack opened at -11.80, strengthening to -11.30, before weakening to -11.65. The Cal 19 was valued at -15.60.

Cash premiums of 380 cSt high sulphur fuel oil cargoes edged higher to a two-week high on Friday amid firm buying interest for physical cargoes in the Singapore trading window.

Sentiment in Asia's fuel oil market was improved this week on expectations of tight arbitrage supplies in October amid refinery turnarounds and a backwardated market structure in Singapore.

This followed steep losses in the second half of August driven by rising arbitrage supplies into Singapore as strong seasonal demand in the Middle East diverted arbitrage cargoes away from Asia.

In the bunker market, 380 cSt HSFO term deals for October delivery were being negotiated at premiums of about $6-$8 per tonne to Singapore quotes, trade sources said.

Economic data/events (Times are London.)

* EIA's Drilling Productivity Report

* OPEC+ Joint Technical Committee conference call

Singapore 380 cSt

Oct18 - 442.00 / 444.00

Nov18 - 438.00 / 440.00

Dec18 - 434.25 / 436.25

Jan19 - 430.50 / 432.50

Feb19 - 426.75 / 428.75

Mar19 - 423.25 / 425.25

Q4-18 - 438.00 / 440.00

Q1-19 - 426.25 / 428.25

Q2-19 - 415.75 / 418.25

Q3-19 - 400.00 / 402.50

CAL19 - 399.50 / 402.50

CAL20 - 334.50 / 340.50

Singapore 180 cSt

Oct18 - 448.50 / 450.50

Nov18 - 445.50 / 447.50

Dec18 - 442.50 / 444.50

Jan19 - 440.00 / 442.00

Feb19 - 436.75 / 438.75

Mar19 - 433.50 / 435.50

Q4-18 - 445.50 / 447.50

Q1-19 - 436.25 / 438.25

Q2-19 - 427.00 / 429.50

Q3-19 - 414.75 / 417.25

CAL19 - 414.00 / 417.00

CAL20 - 354.50 / 360.50

Rotterdam 3.5%

Oct18 - 420.75 / 422.75

Nov18 - 416.75 / 418.75

Dec18 - 413.00 / 415.00

Jan19 - 410.25 / 412.25

Feb19 - 407.75 / 409.75

Mar19 - 405.25 / 407.25

Q4-18 - 417.00 / 419.00

Q1-19 - 407.50 / 409.50

Q2-19 - 397.25 / 399.75

Q3-19 - 377.25 / 379.75

CAL19 - 378.00 / 381.00

CAL20 - 311.50 / 317.50

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