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Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.



Image credit: Freight Investor Services (FIS)


Updated on 12 Sep 2018 08:47 GMT

Commentary

Brent crude futures climbed 30 cents, or 0.4 percent, to $79.36 a barrel. Brent has climbed for four straight sessions, gaining 2.2 percent the previous day. U.S. WTI crude futures were at $69.93 per barrel at 0646 GMT, up 68 cents, or 1 percent, from their last settlement. WTI futures gained 2.5 percent in the previous session. Wow. A high at $79.66 at 4am UK time, and we find ourselves teetering on a significant psychological level, and only a stone's throw away from the highs of the year. If one was a betting man, I don't think you would have put much likelihood of such high levels a few months ago. The API predictions of U.S. stock levels gave all the excuses the bulls needed to push the market up to such lofty levels. I'm sure when it comes to the confirmation of the actual levels reported by the EIA at 3.30pm UK time, the market will react in its usual hesitant way; however, if there is a confirmation of this pretty substantial drop in stocks, do expect this to continue its drive northwards. Like a lit firework, this could take off and explode, or it will get a big bucket of cold water chucked on it and we'll be back down around the $75 levels. Good day.

Fuel Oil Market (Sep 11)

The front crack opened at -11.30, weakening to -11.50 across the day. The Cal 19 was valued at -15.25.

Despite rising crude prices on Tuesday, the front-month 380 cSt barge crack discount to Brent crude was slightly narrower, moving further away from a near four-month low seen in the week before.

After climbing to a more-than 10-month high by the start of August, the front-month barge crack sank to minus $12.08 a barrel on Wednesday, its widest discount since May 15, as rising arbitrage supplies eased concerns of supply constraints that were caused by peak summer demand.

However, while fuel oil arbitrage volumes into Asia are expected to rise from their summer lows over the near term, significant downside risk to the fuel oil crack was seen as limited due to structural declines in output of the fuel. Simple refining margins globally have recently taken a turn for the worse over the last month, largely due to expected weakening of fuel oil margins since their seasonal peak in early August.

Economic data/events (Times are London.)

* ~11am-12am: OPEC issues Monthly Oil Market Report

* 3:30pm: EIA weekly U.S. oil inventory report TopLive blog starts 3:20pm

* Pareto Securities Oil & Offshore Conference, Oslo, with speakers including Seadrill CEO Anton Dibowitz, Aker CEO Oyvind Eriksen, Equinor CFO Lars Christian Bacher, among others

* Eastern Economic Forum, Vladivostok; speakers include Russian Energy Minister Alexander Novak; day 2 of 3

* Genscape weekly ARA crude stockpiles report

Singapore 380 cSt

Oct18 - 445.75 / 447.75

Nov18 - 441.75 / 443.75

Dec18 - 438.00 / 440.00

Jan19 - 434.25 / 436.25

Feb19 - 430.75 / 432.75

Mar19 - 427.25 / 429.25

Q4-18 - 441.75 / 443.75

Q1-19 - 430.25 / 432.25

Q2-19 - 419.50 / 422.00

Q3-19 - 403.75 / 406.25

CAL19 - 405.50 / 408.50

CAL20 - 340.50 / 346.50

Singapore 180 cSt

Oct18 - 452.50 / 454.50

Nov18 - 449.75 / 451.75

Dec18 - 446.75 / 448.75

Jan19 - 444.50 / 446.50

Feb19 - 441.25 / 443.25

Mar19 - 438.00 / 440.00

Q4-18 - 449.50 / 451.50

Q1-19 - 440.25 / 442.25

Q2-19 - 431.00 / 433.50

Q3-19 - 418.75 / 421.25

CAL19 - 420.00 / 423.00

CAL20 - 360.50 / 366.50

Rotterdam 3.5%

Oct18 - 424.75 / 426.75

Nov18 - 420.50 / 422.50

Dec18 - 416.75 / 418.75

Jan19 - 414.25 / 416.25

Feb19 - 411.75 / 413.75

Mar19 - 409.25 / 411.25

Q4-18 - 420.50 / 422.50

Q1-19 - 412.00 / 414.00

Q2-19 - 403.00 / 405.50

Q3-19 - 384.00 / 386.50

CAL19 - 384.00 / 387.00

CAL20 - 320.50 / 326.50



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.






Related Links:

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

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