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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.



Image credit:


Updated on 03 Jul 2018 10:13 GMT

Commentary

Brent closed last night down $1.93 to $77.30 and WTI closed at $73.94, down $0.21. A fairly sharp reaction last night to the ever-growing tension between OPEC+ and Trump. I have to take my hat off to Trump; even though he does sometimes act like a complete buffoon, he is unrelenting in his pursuit of his agenda. Why does he see a need for OPEC+ to raise production? Well, prices are too high and are affecting the consumer. This is bad for demand, which is bad for the economy. This then affects oil demand in the rest of the world, which is bad for global growth. Quite why the rest of the market doesn't see this and wants to keep oil up at these prices is one of life's great unanswerable questions. A bit like: what do vegans say when they are having their photo taken? Think about it. I still don't know whether $80 can be seen as the 'ceiling' on this market, but try as it might to push past $80, it is met with the same resistance as the Russian back four. Libyan supply disruptions are causing the market to still think that perhaps there will be a shortage of supply, but Libya is constantly in a state of peril, so nothing new there. ADNOC and Saudi are both more than capable of producing more bbls, and it looks like the North Sea is also looking to crank things up. Couple this with a 30% increase in US oil production over the last two years and the word 'shortage' might soon be replaced with, dare I say it, Glut. Good day.

Fuel Oil Market (Jul 2)

The front crack opened at -9.35, weakening to -9.75, before strengthening to -9.65. The Cal 19 was valued at -15.00

Cash premiums of Asia's mainstay 380 cSt high sulphur fuel oil eased from a more than three-year high reached in the previous session amid weaker deal values for cargoes of the fuel in the Singapore trading window on Monday

A persistent supply crunch of fuel oil to Asia driven by reduced shipments from exporters such as Iran and Venezuela pushed the fuel's cash premium to Singapore prices to a three-year peak on Friday, with levels expected to stay high for another month

The fewer shipments of fuel oil from northwest Europe to Singapore recently has helped push fuel oil inventories in the Amsterdam-Rotterdam-Antwerp refining and storage hub to a record high of 1.614 million tonnes in the week to June 26, official data showed.

Economic data/events (Times are London.)

* 3pm: U.S. Factory Orders, May

* 3pm: Durable Goods Orders, May (final)

* 9:30pm: API issues weekly U.S. oil inventory report

* Bloomberg-compiled REFINERY SNAPSHOT, looking at key outages at refineries in the U.S. and Canada, and providing offline capacity projections for crude units and FCCs

Singapore 380 cSt

Aug18 - 448.75 / 450.75

Sep18 - 442.75 / 444.75

Oct18 - 438.50 / 440.50

Nov18 - 434.75 / 436.75

Dec18 - 431.50 / 433.50

Jan19 - 428.00 / 430.00

Q4-18 - 435.00 / 437.00

Q1-19 - 424.75 / 426.75

Q2-19 - 412.25 / 414.75

Q3-19 - 385.25 / 387.75

CAL19 - 389.50 / 392.50

CAL20 - 311.25 / 317.25

Singapore 180 cSt

Aug18 - 458.00 / 460.00

Sep18 - 452.75 / 454.75

Oct18 - 449.00 / 451.00

Nov18 - 445.50 / 447.50

Dec18 - 442.50 / 444.50

Jan19 - 439.75 / 441.75

Q4-18 - 445.50 / 447.50

Q1-19 - 436.50 / 438.50

Q2-19 - 425.25 / 427.75

Q3-19 - 402.25 / 404.75

CAL19 - 405.00 / 408.00

CAL20 - 334.50 / 340.50

Rotterdam 3.5%

Aug18 - 430.00 / 432.00

Sep18 - 425.25 / 427.25

Oct18 - 420.50 / 422.50

Nov18 - 416.25 / 418.25

Dec18 - 412.50 / 414.50

Jan19 - 410.00 / 412.00

Q4-18 - 416.50 / 418.50

Q1-19 - 406.25 / 408.25

Q2-19 - 392.00 / 394.50

Q3-19 - 361.00 / 363.50

CAL19 - 368.00 / 371.00

CAL20 - 294.25 / 300.25



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.






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Oil and fuel oil hedging market update
Freight Investor Services Ltd.

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