Oil and fuel oil hedging market update

Commentary

Brent crude futures were at $68.97 a barrel, down 29 cents, or $0.4 percent, from their last close. Brent also marked a December 2014 high the previous day, at $70.05 a barrel. U.S. WTI crude futures were at $63.34 a barrel at 07:55 GMT, down 46 cents, or $0.7 percent, from their last settlement. WTI the day before rose to its strongest since late 2014 at $64.77. Well yesterday afternoon surprised with the move it has been threatening for a few days now: it touched the $70 mark. But like market brain freeze, the heights of the market kicked in and screamed "I DON'T LIKE IT THIS HIGH", as though traders had acute acrophobia suddenly come over them. I think the U.S. deserves a gold star too, having come from a position of almost destruction after the price squeeze by OPEC to now being China's largest oil customer. Impressive. They are the crude market equivalent of the nerdy spotty kid at school who had no friends, who ends up setting up a revolutionary company and selling it to a tech giant for millions, swan around with all the celebs, and have more super cars than you have credit cards. Anyway, this market... we are sure to be in a new range of $65-70, with technical helping us up to these levels (do bear in mind that yesterday the next resistance level was at over $75). Yes, U.S. production is up; yes, the OPEC cut - if you look deeper at the numbers - doesn't constitute too much of a cut; yes, the demand increase is as elusive as the Loch Ness Monster, BUT stocks are down off their highs, OPEC compliance is good, the world economy is growing... positives outweigh the negatives - that has to be it or this market is broken. 'Yes, you can have a pay rise' sounds so much better than a 'no'. Admit it, the fallibility of human nature has pushed up this market. Maybe I have been blinded by the numbers beforehand, but you cannot deny the positive feel to this market.

Fuel Oil Market (January 11)

The front crack opened at -11.30, strengthening to -11.00, weakening to -11.20. The Cal 19 was valued at -11.90.

Asia's fuel oil markets firmed on Thursday after official data showed a sharp drop in Singapore onshore inventories of the residual fuel, reversing a recent downward trend in time spreads and refining margins of the fuel. Singapore weekly inventories fell 13.5% to a seven-month low of 19.66 million barrels (or about 2.934 million tonnes) in the week ended Jan. 10. This came as net fuel oil imports into Singapore fell 43 percent from the week before to a two-week low of 825,000 tonnes.

Marine fuel prices are expected to rise through to 2019 as demand for the fuel, also known as bunkers, remains steady amid increases in global trade volumes, said BMI Research in a note to clients. The longer-term trend in marine fuel prices will be driven by the IMO decision to cap the amount of sulphur in shipping fuels at the start of 2020.

Economic Data and Events

* 1:30pm: U.S. CPI m/m, Dec.

* 1:30pm: U.S. Retail Sales, Dec.

* 1:30pm: U.S. Real Avg Weekly Earnings, Dec.

* 6pm: Baker Hughes U.S. Rotary Gas Rigs, period Jan 12, prior 182

* 6pm: Baker Hughes U.S. Rotary Oil Rigs, period Jan 12, prior 742

* 6pm: Baker Hughes U.S. Rig Count, period Jan 12, prior 924

* 8:30pm: Commodity Futures Trading Commission weekly scheduled report on futures and options positions

Singapore 380 cSt

Feb18 - 377.25 / 379.25

Mar18 - 377.75 / 379.75

Apr18 - 377.50 / 379.50

May18 - 377.25 / 379.25

Jun18 - 376.75 / 378.75

Jul18 - 376.25 / 378.25

Q2-18 - 377.25 / 379.25

Q3-18 - 375.25 / 377.25

Q4-18 - 371.25 / 373.75

Q1-19 - 363.50 / 366.00

CAL19 - 341.75 / 344.75

CAL20 - 290.25 / 295.25

Singapore 180 cSt

Feb18 - 381.75 / 383.75

Mar18 - 382.75 / 384.75

Apr18 - 382.50 / 384.50

May18 - 382.50 / 384.50

Jun18 - 382.00 / 384.00

Jul18 - 381.75 / 383.75

Q2-18 - 382.25 / 384.25

Q3-18 - 380.75 / 382.75

Q4-18 - 377.25 / 379.75

Q1-19 - 371.25 / 373.75

CAL19 - 350.25 / 353.25

CAL20 - 299.25 / 304.25

Rotterdam Barges

Feb18 364.75 / 366.75

Mar18 365.50 / 367.50

Apr18 366.00 / 368.00

May18 365.50 / 367.50

Jun18 364.75 / 366.75

Jul18 363.50 / 365.50

Q2-18 365.50 / 367.50

Q3-18 362.25 / 364.25

Q4-18 354.50 / 357.00

Q1-19 346.50 / 349.00

CAL19 321.25 / 324.25

CAL20 271.25 / 276.25


		Nippon Biofuel secures METI funding for Africa-based marine biofuel supply chain Japanese company to establish Jatropha cultivation and biofuel production facilities in Mozambique and Ghana.

		Everllence’s ammonia-fuelled engine passes factory acceptance test ahead of October delivery Engine built by HHI-EMD will power Eastern Pacific Shipping’s very large ammonia carriers.

		LPC and Gram Marine launch marine lubricants hub in Cameroon Partnership will supply Cyclon and Avin Oil marine lubricants to vessels at West African ports.

		Bunker One expands ULSFO 0.10% supply across northern Germany Supplier adds Weser River ports to network, including Bremerhaven, Bremen, Brake, and Nordenham.

		NYK Line, Golden Island and Yara Clean Ammonia sign term sheet for Singapore ammonia bunkering venture Three companies agree to explore marketing and supply of low-carbon ammonia fuel in Singapore.

		IMO committee to discuss Net-Zero Framework and North-East Atlantic NOx ECA MEPC 84 to consider 57 documents submitted for consideration on the reduction of greenhouse gas emissions.

		Capetanakis: Bunker Buyers Working Group not a pricing forum Past Chair says aim of working group is to ensure the perspective of buyers is reflected in policy work.

		Petronor and H2SITE to deploy membrane technology for hydrogen separation at Spanish refinery Partnership aims to integrate membrane reactor into steam methane reforming process to enhance efficiency.

		Peninsula marks 30 years of marine fuel supply operations Bunker supplier's network now covers more than 50 physical supply ports and 21 commercial offices.

		MOL completes world’s first retrofit installation of Wind Challenger sail system on operating coal carrier Hard-sail propulsion system installed on Kurotakisan Maru III during service for J-Power coal transport operations.

Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.

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