Oil and fuel oil hedging market update

Commentary

The API reported a surprise draw of 2.13 million barrels of U.S. crude oil inventories for the week ending October 12, compared to analyst expectations that this week would see a build in crude oil inventories of 2.167 million barrels. This contradicted an analysts poll as well as a Reuters poll that put the expected figure at a smallish build in stocks. It explains the algo trade at 9.30pm UK time last night when the data was released, as well as the positive territory trading that we are seeing this morning. I'm sure the bulls in the market feel as warm and fuzzy as everyone watching the video of Prince Harry getting a hug from the child on his tour of New Zealand and Australia. Equities up, markets up, stocks down, Iran production down. I'm sure there's many a person ordering the champagne for the Christmas party as they sit on their new long positions, hoping a $100/barrel will pay for the presents for all of the step children. However, it's expected that supply shortages will become less acute and we will see a weakening of spreads. With these higher prices, it seems that Iran isn't too concerned about the cuts to their exports, as higher prices mean that income from oil sales hasn't had the impact probably intended by the Trump administration. Checkmate!. What would have really annoyed Iran and help the U.S. would be a government investment in U.S. oil infrastructure, releasing oil reserves, exemptions on oil exports for Iran, pushing OPEC to increase supply, and Trump will be on top of a cheaper gasoline market for his voters, destruction of a large part of the Middle East's income, as well as Russia, force producers to supply more to keep up with current incomes. Then, when it comes to the 2020 reelection, he'll look like a hero; and then, just before, he can put sanctions back on again. I wonder if he reads this report... maybe we should tweet it. Good day.

Fuel Oil Market (Oct 16)

The front crack opened at -9.05, strengthening to -8.95, before weakening to -9.10. The Cal 19 was valued at -14.00

The front-month 380 cSt barge fuel oil crack on Tuesday widened its discount to Brent crude from a two-month high in the previous session but was still considered by market participants to be trading at strong levels relative to crude.

The crack discount was trading at about minus $8.94 a barrel to Brent crude on Tuesday, down from minus $8.36 a barrel in the previous session; its narrowest discount since Aug. 15.

This came despite weaker oil prices on Tuesday which fell on evidence of higher U.S. oil production and increasing U.S. crude inventories. But reports of a fall in Iranian oil exports helped limit losses.

Economic data/events (Times are UK)

* 12pm: MBA Mortgage Applications, Oct. 12

* 1:30pm : U.S. Housing Starts, Sept.

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

* 7pm: Fed Meeting Minutes

* Argus Global Crude conference, 2nd day of 3

** Speakers: Trafigura Co-Head of Oil Trading Ben Luckock, Repsol Chief Economist Pedro Merino Garcia, BB Energy Global Head of Crude Trading Alessandro Liberati, OMV Supply Trading Head Vladimir Langhamer

* Genscape weekly ARA crude stockpiles report

* EARNINGS: Reliance Industries, Kinder Morgan

Singapore 380 cSt

Nov18 - 488.00 / 490.00

Dec18 - 481.75 / 483.75

Jan19 - 475.50 / 477.50

Feb19 - 469.50 / 471.50

Mar19 - 464.75 / 466.75

Apr19 - 460.00 / 462.00

Q1-19 - 469.75 / 471.75

Q2-19 - 454.75 / 456.75

Q3-19 - 435.00 / 437.50

Q4-19 - 400.00 / 402.50

CAL19 - 440.75 / 443.75

CAL20 - 371.25 / 377.25

Singapore 180 cSt

Nov18 - 495.25 / 497.25

Dec18 - 490.25 / 492.25

Jan19 - 485.50 / 487.50

Feb19 - 479.25 / 481.25

Mar19 - 474.75 / 476.75

Apr19 - 470.25 / 472.25

Q1-19 - 480.00 / 482.00

Q2-19 - 465.75 / 467.75

Q3-19 - 449.00 / 451.50

Q4-19 - 421.25 / 423.75

CAL19 - 454.50 / 457.50

CAL20 - 388.00 / 394.00

Rotterdam 3.5%

Nov18 - 456.25 / 458.25

Dec18 - 450.75 / 452.75

Jan19 - 446.75 / 448.75

Feb19 - 443.00 / 445.00

Mar19 - 439.25 / 441.25

Apr19 - 435.25 / 437.25

Q1-19 - 443.00 / 445.00

Q2-19 - 431.25 / 433.25

Q3-19 - 409.50 / 412.00

Q4-19 - 371.50 / 374.00

CAL19 - 415.50 / 418.50

CAL20 - 350.50 / 356.50


		Island Oil appoints Varsha Sudheer as senior trader in Dubai Marine fuel supplier strengthens trading platform with new hire at recently established UAE hub.

		Bitoil Group seeks bunker trader for Dubai operations Dubai-based company is recruiting for a senior bunker trader role to manage global fuel sales and procurement.

		Uni-Fuels seeks bunker traders for new London operation Singapore-headquartered firm advertises position as part of UK expansion.

		Uni-Fuels seeks bunker traders for new Piraeus office Nasdaq-listed marine fuel provider advertises positions as part of expansion into Greek market.

		Wing sails could cut fuel use by 9% on expedition cruise vessels, study finds Wallenius Marine and Salén Ship Management examine wind propulsion potential beyond cargo shipping.

		Stena RoRo orders C-Flexer RoRo vessels with battery-hybrid propulsion for 2029 delivery Swedish shipowner places order with China Merchants Industry for next-generation vessels designed by NAOS.

		IMO to host technical seminar on marine biofuels in February Event at London headquarters will examine recent experiences and future prospects for biofuels in shipping.

		H2SITE to present ammonia cracking technology at Bergen maritime seminar Spanish firm to showcase dual-environment hydrogen production system for vessels and ports at Maritime CleanTech event.

		Clean Arctic Alliance urges Canada, Iceland and Norway to back polar fuels proposal at IMO Environmental coalition calls on three Arctic nations to support Denmark-led measure on black carbon emissions.

		Valencia and Santos ports establish green corridor to decarbonise transatlantic trade Ports sign agreement to promote low-emission fuels and shore power on Europe–South America route.

Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.

Recommended