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Oil and fuel oil hedging market update

By the Oil Desk at Freight Investor Services.



Freight Investor Services (FIS) logo. Image credit: Freight Investor Services (FIS)


Updated on 21 Jun 2018 10:17 GMT

Commentary

Brent closed last night down $0.34 to $74.74 and WTI closed at $66.22 up $0.37. Well, it seems fitting that Summer solstice is upon us and the longest day of the year is more than likely to mean to mean the longest meeting of the year in Vienna. The market seems like it is stuck between a rock and a hard place and, quite frankly, I don't understand why. Granted, there are many things we don't understand, like why we don't we eat turkey eggs or how Silvio Berlusconi still allowed to run in Italian politics, but alas some things are just not explainable. EIA data was a bit odd last night; sizeable draws on crude which yielded higher product inventories owing to a 1% rise in refinery utilisation. Refinery utilisation in the US is at a mahoosive 96.7%, - about 4% higher than this time last year. The worrying thing, however, is that gasoline demand was down 0.5mnbpd. I know driving season isn't in full swing but is everyone getting a Tesla driven Uber or what? I'm sure we have a volatile day in front of us as rumours and tweets circulate throughout the course of the next 48 hours. All eyes on Vienna. Good day.

Fuel Oil Market (June 20)

The front crack opened at -9.95, weakening to -10.10, before strengthening to -9.60, closing -9.85. The Cal 19 was valued at -16.25.

Asia's 180 cSt fuel oil crack at a discount of $5.41 a barrel on Wednesday reflected the narrowest discount in two weeks as stronger fundamentals could have countered the high oil prices which typically weighs on oil products margins.

Fujairah fuel oil stocks in the week ended June 18 for instance fell 8.8 percent of 861,000 barrels to a two-week low of about 8.9 million barrels. Overall, East Asia is expected to receive less than 6 million tonnes of fuel oil in June, down from a six-month high in May at up to 6.7 million tonnes.

The lower incoming volumes were due largely to fewer cargoes coming to Asia from the West. Japan's refinery utilization rate was down 2.8 percentage point in the week to June 16 to hit its lowest in nearly three years, official data showed.

Economic data/events (Times are London.)

* 12 p.m.: Bank of England Bank Rate, survey 0.5%, prior 0.5%

* 1:30pm: U.S. Initial Jobless Claims, est. 220k (prior 218k)

* 1:30pm: U.S. continuing claims for June 9, est. 1710k (prior 1697k)

* 2pm: FHFA house price index for April, est. 0.5% (prior 0.1%)

* 2:45pm: Bloomberg consumer comfort for June 17 (prior 55.8)

* 3pm: Leading index for May, est. 0.4% (prior 0.4%)

* Today: Singapore onshore oil-product stockpile data

** Russian refining maintenance schedule from ministry

** OPEC's international seminar, final day

** API's monthly statistical report

Singapore 380 cSt

Jul18 - 419.50 / 421.50

Aug18 - 414.25 / 416.25

Sep18 - 409.00 / 411.00

Oct18 - 404.50 / 406.50

Nov18 - 400.75 / 402.75

Dec18 - 397.25 / 399.25

Q3-18 - 414.25 / 416.25

Q4-18 - 401.00 / 403.00

Q1-19 - 390.50 / 393.00

Q2-19 - 378.00 / 380.50

CAL19 - 356.25 / 359.25

CAL20 - 282.00 / 287.00

Singapore 180 cSt

Jul18 - 430.25 / 432.25

Aug18 - 425.00 / 427.00

Sep18 - 420.00 / 422.00

Oct18 - 415.50 / 417.50

Nov18 - 411.75 / 413.75

Dec18 - 408.25 / 410.25

Q3-18 - 425.00 / 427.00

Q4-18 - 412.00 / 414.00

Q1-19 - 402.00 / 404.50

Q2-19 - 391.00 / 393.50

CAL19 - 371.50 / 374.50

CAL20 - 305.50 / 310.50

Rotterdam 3.5%

Jul18 - 401.00 / 403.00

Aug18 - 397.25 / 399.25

Sep18 - 392.75 / 394.75

Oct18 - 388.00 / 390.00

Nov18 - 383.75 / 385.75

Dec18 - 379.75 / 381.75

Q3-18 - 397.00 / 399.00

Q4-18 - 383.75 / 385.75

Q1-19 - 373.50 / 376.00

Q2-19 - 360.00 / 362.50

CAL19 - 335.50 / 338.50

CAL20 - 268.50 / 273.50



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 contact the company on +44 20 7090 1120.






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Oil and fuel oil hedging market update
Freight Investor Services Ltd.

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