Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.



Image credit: Freight Investor Services (FIS)


Updated on 23 Oct 2018 08:54 GMT

Commentary

Brent crude oil futures were at $79.62 a barrel at 04:27 GMT, down 21 cents, or 0.3 percent, from their last close, and U.S. WTI crude futures were at $69.26 a barrel, dropping 10 cents from their last settlement. So Saudi Arabia has said that it is going to fulfil a 'responsible role'. Well, who knows what that means. The news this morning has had some sentiment impact, with JP Morgan amending its Brent price forecast up by $20.50 to $83.50.

Fuel Oil Market (Oct 22)

The front crack opened at -7.35, strengthening to -7.05, before weakening to -7.20. The Cal 19 was valued at -12.70.

Asia's November 180 cSt high sulphur fuel oil crack to Dubai crude edged slightly lower on Monday but was still trading at a premium, boosted by tight near-term supplies and firm demand.

Strong Saudi Arabian demand for fuel oil for use in power generation in place of crude oil is propping up demand for fuel oil as the world's largest exporter seeks to maximise available supplies of crude for export ahead of looming U.S. sanctions on Iranian oil exports, trade sources said.

Looming U.S. sanctions on Iranian oil exports kicking in on Nov. 4 are contributing to concerns of tightening global supplies, adding to structural declines in fuel oil production from key producers like Russia, Venezuela and Mexico. The front-month 180 cSt crack to Dubai crude slipped to 34 cents a barrel on Monday, down from 40 cents a barrel on Friday, the highest premium since June 2017.

Economic data/events (Times are UK)

* 3pm: Richmond Fed manufacturing Index, Oct.

* 3pm: Wood Mackenzie to hold webinar on impact of IMO 2020 rules

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

* Bloomberg-compiled Refinery Snapshot for U.S. and Canada; gives offline capacity projections for crude units and FCCs

* Future Investment Initiative conference, Riyadh, speakers to include Saudi Energy Minister Khalid Al-Falih and Saudi Aramco CEO Amin Nasser, 1st day of 3

** Many expected attendees have withdrawn from the event after the disappearance of government critic Jamal Khashoggi at the Saudi consulate in Turkey earlier this month

* OPEC Board of Governors meeting, 3rd day of 3; Governors to discuss framework for long-term cooperation between OPEC and a group of non-OPEC countries

* EARNINGS: Saipem SpA

Singapore 380 cSt

Nov18 - 483.50 / 485.50

Dec18 - 476.25 / 478.25

Jan19 - 469.25 / 471.25

Feb19 - 462.75 / 464.75

Mar19 - 457.25 / 459.25

Apr19 - 452.25 / 454.25

Q1-19 - 463.25 / 465.25

Q2-19 - 447.25 / 449.25

Q3-19 - 428.50 / 431.00

Q4-19 - 396.75 / 399.25

CAL19 - 436.00 / 439.00

CAL20 - 367.50 / 373.50

Singapore 180 cSt

Nov18 - 490.75 / 492.75

Dec18 - 484.50 / 486.50

Jan19 - 479.25 / 481.25

Feb19 - 472.75 / 474.75

Mar19 - 467.50 / 469.50

Apr19 - 462.75 / 464.75

Q1-19 - 473.25 / 475.25

Q2-19 - 458.25 / 460.25

Q3-19 - 442.50 / 445.00

Q4-19 - 418.00 / 420.50

CAL19 - 450.25 / 453.25

CAL20 - 390.50 / 396.50

Rotterdam 3.5%

Nov18 - 453.50 / 455.50

Dec18 - 446.25 / 448.25

Jan19 - 441.25 / 443.25

Feb19 - 436.50 / 438.50

Mar19 - 432.00 / 434.00

Apr19 - 427.75 / 429.75

Q1-19 - 436.50 / 438.50

Q2-19 - 423.00 / 425.00

Q3-19 - 403.00 / 405.50

Q4-19 - 368.75 / 371.25

CAL19 - 411.50 / 414.50

CAL20 - 345.00 / 351.00



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.