Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.



Image credit: Freight Investor Services (FIS)


Updated on 19 Oct 2018 09:53 GMT

Commentary

Brent crude oil futures were trading at $79.51 per barrel at 05:21 GMT, up 22 cents, or 0.3 percent, from their last close, and U.S. WTI crude futures were up 19 cents, or 0.3 percent, at $68.84 a barrel. As we now sit under the $80 level, we can reflect on this week. Two contradicting factors this morning: refinery throughput in China, the world’s second-largest oil importer, rose to a record high of 12.49 million barrels per day (bpd) in September as some independent plants restarted operations after prolonged shutdowns over summer to shore up inventories. And on the other hand, undermining the strong refinery data, China did on Friday report its weakest economic growth since 2009 in the third quarter, with gross domestic product expanding by only 6.5 percent, missing estimates. Something makes me think that this will be an up kind of day. We've been sitting neutrally for a while and it's time for a new move. Good day.

Fuel Oil Market (Oct 18)

The front crack opened at -8.35, strengthening to -8.05, before weakening to -8.45. The Cal 19 was valued at -13.75.

Cash premiums for cargoes of Asia's mainstay 380 cSt highsulphur fuel oil slipped on Thursday, falling away from a more than two-month high in the previous session amid lower deal values in the Singapore trading window.

Industry sources however said sentiment was still supported by the relatively tight availability of near-term supplies in Singapore which are weighed down by limited arbitrage flows into the city-state this month.

Singapore fuel oil inventories slipped to a two-week low in the week to Oct. 17, as net imports of the fuel shrank to a four-week low.

Onshore fuel oil inventories fell 5 percent, or 946,000 barrels (about 141,000 tonnes), to 17.707 million barrels, or 2.643 million tonnes.

Economic data/events (Times are UK)

* 3pm: U.S. Existing Home Sales, Sept.

* 6pm: Baker Hughes rig count

* ~6:30pm: ICE weekly commitments of traders report for Brent, gasoil

* 8:30pm: CFTC weekly commitments of traders report on various U.S. futures and options contracts

Singapore 380 cSt

Nov18 - 483.25 / 485.25

Dec18 - 476.25 / 478.25

Jan19 - 469.50 / 471.50

Feb19 - 463.00 / 465.00

Mar19 - 457.50 / 459.50

Apr19 - 452.25 / 454.25

Q1-19 - 463.25 / 465.25

Q2-19 - 447.50 / 449.50

Q3-19 - 427.75 / 430.25

Q4-19 - 394.25 / 396.75

CAL19 - 439.00 / 442.00

CAL20 - 369.75 / 375.75

Singapore 180 cSt

Nov18 - 490.75 / 492.75

Dec18 - 485.00 / 487.00

Jan19 - 479.75 / 481.75

Feb19 - 474.00 / 476.00

Mar19 - 468.75 / 470.75

Apr19 - 463.50 / 465.50

Q1-19 - 474.00 / 476.00

Q2-19 - 459.75 / 461.75

Q3-19 - 442.50 / 445.00

Q4-19 - 416.00 / 418.50

CAL19 - 453.00 / 456.00

CAL20 - 393.25 / 399.25

Rotterdam 3.5%

Nov18 - 452.00 / 454.00

Dec18 - 445.75 / 447.75

Jan19 - 441.25 / 443.25

Feb19 - 437.00 / 439.00

Mar19 - 432.75 / 434.75

Apr19 - 428.50 / 430.50

Q1-19 - 437.00 / 439.00

Q2-19 - 424.00 / 426.00

Q3-19 - 402.25 / 404.75

Q4-19 - 368.75 / 371.25

CAL19 - 413.00 / 416.00

CAL20 - 349.50 / 355.50



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.