Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.



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Updated on 14 Jun 2018 10:03 GMT

Commentary

Brent closed last night at $76.74, up $0.86, and WTI closed up $0.28 to $66.64. Well, thanks API, you are about as successful at correctly predicting results as Mark Lawrenson. We spent the majority of the day trading down yesterday, all on the assumption that across both crude and products we would see sizeable builds when EIA data came out; but alas, no. There were draws on everything, and fairly substantial ones at that. I mentioned yesterday that this week's set of data was crucial in determining the start of driving season and this summer's demand; now one can confidently opine that it is all looking rather rosy for products. What is interesting is the fact that the arb is open from the US to Europe, something that historically should be the other way round at this time of year, but is this down to weak fundamentals across the pond or a seismic shift in how the US traders operate? All this crude they are producing is yielding higher exports and higher product stocks, so why wouldn't the arb work East from the US? Something to think about at least.

Fuel Oil Market (June 13)

Crack -10.15 fairly steady today as Asian refining margins for fuel oil are set to hold near their current strong levels through the summer as increased use of the fuel by utilities to power air conditioners for cooling and disruptions to trade flows shrink global supplies. "Robust power generation demand in the Middle East (notably Saudi Arabia) should result in lower fuel oil outflows from the region, While fuel oil markets typically strengthen during the northern hemisphere summer months, trade sources said fuel oil margins have demonstrated additional strength this year by shrugging off sharp gains in crude oil prices LCOc1, which in mid-May climbed to their highest since November 2014.

Economic data/events (Times are London.)

* 9am: Singapore onshore oil-product stockpile data

* 1:30pm: U.S. Retail Sales Advance m/m for May

* 1:30pm: U.S. Initial Jobless Claims for June 9

* Russian refining maintenance schedule from ministry

**See OIL WEEKLY AGENDA for this week’s events

Singapore 380 cSt

Jul18 - 432.75 / 434.75

Aug18 - 428.75 / 430.75

Sep18 - 424.75 / 426.75

Oct18 - 420.75 / 422.75

Nov18 - 417.25 / 419.25

Dec18 - 414.00 / 416.00

Q3-18 - 428.75 / 430.75

Q4-18 - 417.50 / 419.50

Q1-19 - 407.25 / 409.75

Q2-19 - 397.25 / 399.75

CAL19 - 377.00 / 380.00

CAL20 - 302.00 / 307.00

Singapore 180 cSt

Jul18 - 443.25 / 445.25

Aug18 - 439.75 / 441.75

Sep18 - 435.50 / 437.50

Oct18 - 431.75 / 433.75

Nov18 - 428.50 / 430.50

Dec18 - 425.50 / 427.50

Q3-18 - 439.50 / 441.50

Q4-18 - 428.75 / 430.75

Q1-19 - 419.00 / 421.50

Q2-19 - 409.00 / 411.50

CAL19 - 391.50 / 394.50

CAL20 - 325.50 / 330.50

Rotterdam 3.5%

Jul18 - 416.00 / 418.00

Aug18 - 413.00 / 415.00

Sep18 - 409.25 / 411.25

Oct18 - 405.00 / 407.00

Nov18 - 400.75 / 402.75

Dec18 - 396.50 / 398.50

Q3-18 - 412.75 / 414.75

Q4-18 - 400.50 / 402.50

Q1-19 - 390.25 / 392.75

Q2-19 - 376.75 / 379.25

CAL19 - 355.50 / 358.50

CAL20 - 287.50 / 292.50



Founded in 2002, Freight Investor Services is a specialist in dry bulk and commodity derivatives, including cargo freight, iron ore, fertilizer and bunker fuel. The company has offices in London, Dubai, Singapore and Shanghai.

For further details about fuel oil swaps or to discuss trading opportunities, please call +44 20 7090 1120, or email info@freightinvestor.com.