Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.



Image credit: Freight Investor Services (FIS)


Updated on 16 Nov 2018 11:14 GMT

Commentary

Brent crude oil futures were at $67.49 per barrel at 07:47 GMT, up 87 cents, or 1.3 percent, from their last close, and U.S. WTI crude oil futures were at $56.96 per barrel, up 50 cents, or 0.9 percent. OPEC have kickstarted their PR machine and the numbers have started flying. Apparently, the Saudis will be cutting output by 500,000 bpd in December, with an aim to get an agreement of around 1 million bpd reduction from the OPEC meeting on December 6th. So far, this market feels like everyone is taking a bit of a break. Chilling out, putting on some music, ice cold drink. Picking up the phone and talking to their best mate in the market: "That escalated quickly, I mean that really got out of hand fast". After a 4% fall a couple of days ago, followed by a staggered, but significant, bounce back, the question is how do you price in such indecision? I don't know, do you? Cut vs higher production from others, demand growth vs world economy slump, OPEC rhetoric vs U.S. pumping figures, China vs The United States, Kramer vs Kramer, jam then cream or cream then jam on a scone? Does the milk go before or after pouring the tea? The list goes on. Judging by the volume going through in Brent so far today, it looks like people may have started the weekend early. Good weekend to all.

Fuel Oil Market (Nov 15)

The front crack opened at -5.30, strengthening to -5.25, before weakening to -5.45. The Cal 19 was valued at -12.00.

Market sentiment eased on Thursday amid signs of rising fuel oil arbitrage flows into the Singapore hub over the past week, weighing on fuel oil cash premiums, cracks and time spreads.

The December 380 cSt barge fuel oil crack to Brent crude was trading at about minus $5.45 a barrel on Thursday, compared with a discount of $5.20 a barrel in the previous session, broker sources said.

The 380 cSt Dec/Jan time spread also slipped to about $10.25 a tonne on Thursday, down from about $10.50 a tonne on Wednesday.

Singapore fuel oil inventories slipped 255,000 barrels (about 38,000 tonnes) to 15.821 million barrels, or 2.361 million tonnes, data from International Enterprise (IE) Singapore showed.

Economic Events:

* 2:15pm: U.S. Industrial Production, Oct.

* 4pm: Kansas City Fed Manufacturing Activity, Nov.

* 6pm: Baker Hughes rig count

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

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

* Angola loading program for January

Singapore 380 cSt

Dec18 - 433.50 / 435.50

Jan19 - 422.25 / 424.25

Feb19 - 413.50 / 415.50

Mar19 - 407.25 / 409.25

Apr19 - 401.75 / 403.75

May19 - 396.00 / 398.00

Q1-19 - 414.25 / 416.25

Q2-19 - 397.25 / 399.25

Q3-19 - 377.00 / 379.50

Q4-19 - 345.25 / 347.75

CAL19 - 381.00 / 384.00

CAL20 - 320.50 / 326.50

Singapore 180 cSt

Dec18 - 438.25 / 440.25

Jan19 - 427.50 / 429.50

Feb19 - 420.00 / 422.00

Mar19 - 414.75 / 416.75

Apr19 - 410.75 / 412.75

May19 - 405.75 / 407.75

Q1-19 - 420.75 / 422.75

Q2-19 - 407.00 / 409.00

Q3-19 - 389.00 / 391.50

Q4-19 - 361.50 / 364.00

CAL19 - 392.25 / 395.25

CAL20 - 342.00 / 348.00

Rotterdam 3.5%

Dec18 - 394.00 / 396.00

Jan19 - 387.50 / 389.50

Feb19 - 382.50 / 384.50

Mar19 - 377.50 / 379.50

Apr19 - 372.75 / 374.75

May19 - 368.25 / 370.25

Q1-19 - 382.50 / 384.50

Q2-19 - 368.25 / 370.25

Q3-19 - 348.00 / 350.50

Q4-19 - 314.00 / 316.50

CAL19 - 351.50 / 354.50

CAL20 - 295.00 / 301.00

0.1% Rott barges Gasoil

Dec18 - 614.73 / 616.73

Jan19 - 615.41 / 617.41

Feb19 - 614.33 / 616.33

Mar19 - 613.61 / 615.61

Apr19 - 613.67 / 615.67

May19 - 615.06 / 617.06

Q1-19 - 614.95 / 616.95

Q2-19 - 615.32 / 617.32

Q3-19 - 623.06 / 625.56

Q4-19 - 624.86 / 627.86

CAL19 - 622.23 / 626.23

CAL20 - 628.47 / 634.47

Sing GO 10ppm

Dec18 - 83.49 / 83.69

Jan19 - 83.49 / 83.69

Feb19 - 83.46 / 83.66

Mar19 - 83.39 / 83.59

Apr19 - 83.36 / 83.56

May19 - 83.35 / 83.55

Q1-19 - 83.35 / 83.75

Q2-19 - 83.23 / 83.63

Q3-19 - 83.64 / 83.94

Q4-19 - 83.93 / 84.33

CAL19 - 83.42 / 84.02

CAL20 - 83.51 / 84.51



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.