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


Andrés Galnares and Gorka Hermoso, H2SITE. H2SITE closes Series B round above €42m to scale hydrogen membrane technology  

Fresh capital secured as firm targets large-scale industrial deployment and expansion into Asian markets.

Mitsubishi Heavy Industries (MHI) logo. MHI study points to cost reduction potential in India-to-Singapore green ammonia value chain  

Mitsubishi Heavy Industries analysis finds value chain optimisation could cut green ammonia costs.

YM Wayfinder naming ceremony. Yang Ming names third LNG dual-fuel boxship for Asia–North Europe service  

YM Wayfinder joins two sister vessels already operating on LNG on the FE3 route.

Milind Homkar, Flex Commodities. Flex Commodities appoints Milind Homkar as trade controller  

Dubai-based trader brings in finance and audit specialist to lead trade control function.

Launching ceremony of Kypros Island vessel. Safe Bulkers launches first methanol dual-fuel bulk carrier at Chinese shipyard  

Greek dry bulk operator launches first methanol-powered vessel as part of its fleet renewal programme.

MAmmoSS graphic. Mitsubishi Shipbuilding receives order for ammonia fuel handling system  

MAmmoSS system will support shop testing of ammonia marine engines from two licensors.

Neoliner Origin vessel. Kongsberg Maritime to lead EU Horizon project targeting wind-assisted propulsion at scale  

A 15-partner European consortium will use two full-scale vessel demonstrators to validate wind propulsion technology.

Petrobras logo. Petrobras warns of extended MGO and VLSFO supply suspension at Port of Itaqui  

Fuel distributor announces pipeline maintenance shutdowns affecting both MGO and VLSFO supply.

Richard Berkling, PowerCell Group. PowerCell secures SEK 50m marine fuel cell order for two liquid hydrogen cargo ships  

Swedish fuel cell maker wins contract to power two North Sea hydrogen vessels by 2028.

Wärtsilä hydrogen engine. MatH2 consortium launched to tackle hydrogen materials barriers  

New Finnish-led alliance targets materials compatibility challenges holding back hydrogen adoption.