Tue 16 Jan 2018 09:23

Oil and fuel oil hedging market update


By the Oil Desk at Freight Investor Services.



Commentary

Brent hit $70.37 a barrel on Monday, a December 2014 high - when markets were at the beginning of a three year-long slump. U.S. WTI crude futures were at $64.47 a barrel, up $17 cents, or 0.3 percent from their last settlement, after WTI hit a December-2014 peak of $64.89 a barrel in early trading. Well, who'd have thunk it; look at the headlines this morning: 'Oil prices up at 3 year highs, as market supported by healthy demand'. Well, yeeeessss, in any historical look at demand it looks pretty healthy. It's like my food intake across the day; it looks a pretty healthy amount, around the levels of the last few years, BUT, and that is a big butt, exercise needs to be taken into account. What's the point in just focusing on demand and not supply. Not to worry, the very accurate projections from banks are here to back it up. Merrill Lynch: 'We now see a deficit of 430,000 bpd in 2018 compared to 100,000 prior'; Morgan Stanley: 'oil markets were 0.5 million bpd undersupplied in 2017'. Well, l'm sure you can talk up the numbers to show anything. It's like modern art: "What do you see?" "I see the artist's attempt to illicit the feeling of sorrow and the bottom corner makes me see into the tormented soul of the artist, really understanding their feelings when creating this piece". NO, I see randomly arranged colours on a canvas. The banks are like a used car salesman: they have a vested interest in it going up, up to the hilt they are. So of course they aren't going to talk it down. "Well, it's an okay car, not really worth the money, once you get to about 40 mph, it drags to the left, which is pretty dangerous, actually." Technically, we are due a corrective phase, so don't be too surprised if we get a drop back in prices, before a renewal of the bullish sentiment.

Fuel Oil Market (January 15)

The front crack opened at -11.15, weakening to -11.55 across the day. The Cal 19 was valued at -11.90.

Cash premiums for Asia's 380 cSt high-sulphur fuel oil cargoes climbed to their highest since Jan. 3 amid elevated deal value on Monday, trade sources said.

In the break bulk ex-wharf market, stiff competition weighed on 380 cSt fuel oil ex-wharf premiums as suppliers sought to attract buyers ahead of the lull period during the Chinese new year holidays next month, source said.

ST Shipping, Glencore's shipping arm, has chartered the Almi Sun suezmax tanker to load up to 130,000 tonnes of fuel oil from the Middle East Gulf around Jan. 18 for discharge into Asia, according to ship broker reports and ship tracking data in Reuters Eikon.

Economic Data and Events

* EIA releases monthly Drilling Productivity Report

* Sandefjord oil conference, with speakers including Statoil CEO Eldar Saetre and Norway Petroleum and Energy Minister Terje Soviknes, 1st day of 2

* China National Petroleum Corp. releases annual oil and gas report

* Argus Americas Crude Summit, Houston, with executives from Trafigura, Reliance Industries, Motiva Enterprises, among others, 1st day of 3

* Angola, Nigerian loading programs for March

Singapore 380 cSt

Feb18 - 378.00 / 380.00

Mar18 - 378.50 / 380.50

Apr18 - 378.75 / 380.75

May18 - 378.75 / 380.75

Jun18 - 378.25 / 380.25

Jul18 - 377.75 / 379.75

Q2-18 - 378.50 / 380.50

Q3-18 - 376.75 / 378.75

Q4-18 - 372.75 / 375.25

Q1-19 - 365.00 / 367.50

CAL19 - 346.50 / 349.50

CAL20 - 292.00 / 297.00

Singapore 180 cSt

Feb18 - 382.50 / 384.50

Mar18 - 383.50 / 385.50

Apr18 - 383.75 / 385.75

May18 - 384.00 / 386.00

Jun18 - 383.50 / 385.50

Jul18 - 383.25 / 385.25

Q2-18 - 383.75 / 385.75

Q3-18 - 382.25 / 384.25

Q4-18 - 378.75 / 381.25

Q1-19 - 372.75 / 375.25

CAL19 - 355.00 / 358.00

CAL20 - 301.00 / 306.00

Rotterdam Barges

Feb18 365.75 / 367.75

Mar18 366.75 / 368.75

Apr18 367.25 / 369.25

May18 367.00 / 369.00

Jun18 366.50 / 368.50

Jul18 365.25 / 367.25

Q2-18 366.75 / 368.75

Q3-18 363.25 / 365.25

Q4-18 355.00 / 357.50

Q1-19 347.00 / 349.50

CAL19 326.00 / 329.00

CAL20 272.00 / 277.00


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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