Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.



Image credit: Freight Investor Services (FIS)


Updated on 15 Nov 2018 10:45 GMT

Commentary

Front-month Brent crude oil futures were trading at $66.17 per barrel at 07:37 GMT, up 5 cents from their last close, and U.S. WTI crude futures were at $56.29 a barrel, up 4 cents from their last settlement. I definitely think that OPEC should employ Theresa May once she has stepped down as Prime Minister. She would be a fantastic negotiator when it comes to OPEC agreements. She has managed with the Brexit negotiations to put together an agreement hailed as delivering Brexit without anything changing. The ultimate kick-the-can-down -the-road solution. Wouldn't that be a fantastic asset to the major oil producers of the world? We have agreed to cut production, but we won't actually cut production, but we will call it a production cut; secretly though, everyone knows it's not really a cut, but we will still label it a cut, and belligerently keep going on and on and on. Production cut means production cut! In the wider news of the market, nothing much has changed. People are still worrying over production levels, as well as declining confidence in the world economy and therefore its ability to keep driving demand. I love how there was a delay in getting the market to correct; none of the discussion points above are new, but it seems that it takes the financial longs to withdraw from the market before the market is able to correct properly. EIA at 4pm UK time, probably fairly plain sailing until then, unless you're in British politics... oh there we go, Brexit secretary has resigned.

Fuel Oil Market (Nov 14)

The front crack opened at -5.45, strengthening to -5.15, before weakening to -5.30. The Cal 19 was valued at -12.20.

The front-month 380 cSt fuel oil barge crack to Brent crude firmed on Wednesday, contracting its discount to Brent crude to its narrowest in more than 14 months amid a sharp selloff in crude futures over the past two weeks.

The December 380 cSt barge fuel oil crack to Brent crude was trading at about minus $5.60 a barrel on Wednesday, compared with a discount of $53.75 a barrel in the previous session. Oil struggled to find its footing on Wednesday after plunging 7 percent in the previous session, with surging supply and the spectre of faltering demand scaring off investors.

But as Asian trade came to a close on Wednesday, oil prices began to climb after it was reported that OPEC and its partners are discussing a proposal to cut oil output by up to 1.4 million barrels per day (bpd) for 2019 to avert an oversupply that would weaken prices.

Economic Events:

* 1:30pm: U.S. Retail Sales Advance, Oct.

* 1:30pm: U.S. Initial Jobless Claims, Nov. 10

* 1:30pm: U.S. Continuing Claims, Nov. 3

* 1:45pm: Bloomberg Consumer Comfort, Nov. 11

* 4pm: EIA weekly crude oil inventory report; a day later than usual due to Veterans Day holiday

* Singapore onshore oil-product stockpile data

* Adipec conference Abu Dhabi, final day

* Russian refining maintenance schedule from ministry

Singapore 380 cSt

Dec18 - 427.25 / 429.25

Jan19 - 416.75 / 418.75

Feb19 - 408.50 / 410.50

Mar19 - 402.25 / 404.25

Apr19 - 397.00 / 399.00

May19 - 391.50 / 393.50

Q1-19 - 409.25 / 411.25

Q2-19 - 391.75 / 393.75

Q3-19 - 372.00 / 374.50

Q4-19 - 340.00 / 342.50

CAL19 - 377.25 / 380.25

CAL20 - 316.75 / 322.75

Singapore 180 cSt

Dec18 - 432.50 / 434.50

Jan19 - 422.50 / 424.50

Feb19 - 415.50 / 417.50

Mar19 - 410.50 / 412.50

Apr19 - 406.00 / 408.00

May19 - 401.25 / 403.25

Q1-19 - 416.25 / 418.25

Q2-19 - 401.00 / 403.00

Q3-19 - 384.50 / 387.00

Q4-19 - 356.50 / 359.00

CAL19 - 389.00 / 392.00

CAL20 - 337.75 / 343.75

Rotterdam 3.5%

Dec18 - 388.75 / 390.75

Jan19 - 381.75 / 383.75

Feb19 - 376.75 / 378.75

Mar19 - 372.00 / 374.00

Apr19 - 367.50 / 369.50

May19 - 363.00 / 365.00

Q1-19 - 376.75 / 378.75

Q2-19 - 362.75 / 364.75

Q3-19 - 343.25 / 345.75

Q4-19 - 309.50 / 312.00

CAL19 - 347.75 / 350.75

CAL20 - 292.75 / 298.75

0.1% Rott barges Gasoil

Dec18 - 619.30 / 621.30

Jan19 - 619.01 / 621.01

Feb19 - 617.25 / 619.25

Mar19 - 616.36 / 618.36

Apr19 - 615.73 / 617.73

May19 - 616.49 / 618.49

Q1-19 - 618.04 / 620.04

Q2-19 - 616.95 / 618.95

Q3-19 - 622.57 / 625.07

Q4-19 - 626.64 / 629.64

CAL19 - 623.74 / 627.74

CAL20 - 631.09 / 637.09

Sing GO 10ppm

Dec18 - 84.23 / 84.43

Jan19 - 84.14 / 84.34

Feb19 - 84.01 / 84.21

Mar19 - 83.93 / 84.13

Apr19 - 83.87 / 84.07

May19 - 83.83 / 84.03

Q1-19 - 83.93 / 84.33

Q2-19 - 83.78 / 84.18

Q3-19 - 84.23 / 84.53

Q4-19 - 84.57 / 84.97

CAL19 - 84.01 / 84.61

CAL20 - 84.20 / 85.20



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.