Tue 28 Nov 2017, 09:15 GMT

Oil and fuel oil hedging market update


By the Oil Desk at Freight Investor Services.



Brent closed down $0.02 last night to $63.84 and WTI closed at $58.11, down $0.84. So, it looks like the rally on Brent has stalled somewhat prior to the OPEC meeting on Thursday. It's annoying really as I'm not quite sure what "surprise" the market expects. I'm pretty convinced it has already priced in an extension of the cuts out to end 2018, so anything less than this will be a disappointment and potentially catastrophic for flat price. It's a bit like when you're at home and you hear a low flying helicopter flying outside your house. You rush to the window, "Quick love, get the kids!". Everyone peeks out of the window at the sight of a very low flying helicopter and potential Hollywood-style action. Where in fact it turns out that some idiot has stolen a loaf of bread from the local 7-11 and the fun is over when he's nabbed by the local bobby on a bike. That's what the build up to the OPEC meeting is like. All the talk seems to have shifted to beyond OPEC and the future of crude oil production. Not in the next 2,3 or 5 years but further out than that - the medium term. And the only words on peoples lips are either gas or shale production. Let me put it to you this way: the top 7 most valuable companies by market capitalization are all tech companies. Tech is the way forward no matter how much you may try to ignore it with your Nokia 3310 and weekly trips to the library. Shale oil is the future and it is being driven by innovative technology. I sense that the market in general has yielded to this reality and with it, inevitably, comes people moving away from the more traditional ways of doing things. Now don't get me wrong, I like an Artisanal bakery, a trip to a farmers market and visiting my local butcher, but at the end of the day, in today's world it is a lot easier to just go to Tesco online and press "repeat last order". Buy, sell, OPEC, repeat.

Fuel Oil Market (November 27)

The front crack opened at -8.70, strengthened to -8.55, before weakening to -8.60. The Cal 18 was valued at -7.90.

Asian fuel oil refining margins on Monday snapped five straight sessions of losses after expectations of ample near-term supplies of the industrial fuel dampened sentiment

Asia's 180 cSt fuel oil crack to Brent crude cents narrowed its discount by 14 cents a barrel to -$5.12 a barrel. On Friday, the front-month crack sank to a seven-month low of -$5.26 a barrel.

Meanwhile, improved buying interest for spot physical cargoes of 380 cSt fuel oil helped lift cash premiums of the fuel away from a near two-week low it reached on Friday.

A total of 1.28 million tonnes of fuel oil have traded in the window in November so far, against 1.56 million tonnes in October.

Economic Data/Events: (UK times)

* 1:30pm: U.S. Advance Goods Trade Balance, Oct.

* 1:30pm: U.S. Wholesale Inventories, Oct. (prelim)

* 1:30pm: U.S. Retail Inventories (Oct.)

* 2pm: U.S. FHFA House Price Index (Sept.)

* 2:45pm: Senate Banking, Housing and Urban Affairs Cmte hearing on nomination of Jerome Powell to be Fed chair

* 3pm: U.S. Conf. Board Consumer Confidence (Nov.)

* 3pm: U.S. Richmond Fed. Manf Index (Nov.)

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

Singapore 380 cSt

Dec17 - 362.00 / 364.00

Jan18 - 361.25 / 363.25

Feb18 - 360.00 / 362.00

Mar18 - 359.25 / 361.25

Apr18 - 358.00 / 360.00

May18 - 357.00 / 359.00

Q1-18 - 360.00 / 362.00

Q2-18 - 357.00 / 359.00

Q3-18 - 351.75 / 354.25

Q4-18 - 346.25 / 348.75

CAL18 - 355.75 / 358.75

CAL19 - 321.25 / 326.25

Singapore 180 cSt

Dec17 - 366.00 / 368.00

Jan18 - 365.50 / 367.50

Feb18 - 365.00 / 367.00

Mar18 -364.50 / 366.50

Apr18 - 363.75 / 365.75

May18 - 363.00 / 365.00

Q1-18 - 365.00 / 367.00

Q2-18 - 362.75 / 364.75

Q3-18 - 357.75 / 360.25

Q4-18 -352.50 / 355.00

CAL18 - 362.00 / 365.00

CAL19 - 330.00 / 335.00

Rotterdam 380 cSt

Dec17 343.75 / 345.75

Jan18 344.00 / 346.00

Feb18 344.00 / 346.00

Mar18 343.75 / 345.75

Apr18 343.00 / 345.00

May18 342.25 / 344.25< br>
Q1-18 343.75 / 345.75

Q2-18 3342.25 / 344.25

Q3-18 337.75 / 340.25

Q4-18 3329.25 / 331.75

CAL18 339.75 / 342.75

CAL19 301.25 / 306.25


United LNG I bunker vessel alongside Blue Aspire vessel. Titan charters 8,000-cbm LNG bunker vessel for ZARA region operations  

United LNG I to deliver LNG and bio-LNG across Amsterdam, Rotterdam, Antwerp and Zeebrugge ports.

Flag of Mauritania. Peninsula begins physical bunker supply operations in Mauritania  

Marine fuel supplier operating two barges following licence award from the Mauritanian National Hydrocarbons Commission.

X-Press Cassiopeia vessel. PuriFire Energy signs biomethanol supply deal with X-Press Feeders  

Letter of intent covers up to 15,000 tonnes annually for feeder carrier’s fleet.

Alan Yang and Yujin Kang, Flex Commodities. FLEX Commodities opens Seoul office with new Korea leadership team  

Dubai-based trader establishes South Korea presence with appointments of Alan Yang and Yujin Kang.

Eng. Sulaiman Ali Al Hadhrami, O Bunkering. O Bunkering appoints Sulaiman Alhadhrami as chief executive officer  

Omani bunker supplier names new CEO to lead growth and expansion in the maritime sector.

Shore power system. Zhoushan expands shore power infrastructure as part of emissions reduction drive  

Chinese port city reports 30% increase in shore power usage across terminals and berths.

Hamburg Express vessel. Hapag-Lloyd and Kuehne+Nagel partner on biofuel initiative for Asia-Europe trade  

Agreement covers 3,300-teu using waste-based biofuels, targeting a 2,979-tonne CO₂e reduction in 2026.

Rendering of a tug vessel. Berg Propulsion to supply electric propulsion systems for India’s green tugs  

Swedish firm to provide thrusters and electrical integration for two 60-tonne bollard pull battery-electric vessels.

Singapore skyline with Merlion and central business district. World Fuel seeks marine fuel supply executive in Singapore  

Role to manage supplier relationships and source marine fuel across South-East Asia and Australia-New Zealand.

OOCL Wisdom naming ceremony. OOCL names first methanol dual-fuel vessel  

Orient Overseas Container Line christens OOCL Wisdom, dubbed the world’s largest methanol dual-fuel container vessel.