Wed 28 Feb 2018, 09:26 GMT

Oil and fuel oil hedging market update


By the Oil Desk at Freight Investor Services.



Commentary

Brent crude was down 25 cents, or 0.4 percent, at $66.38 a barrel. On Tuesday, Brent fell 87 cents to $66.63 by 07:55 GMT, U.S. WTI was down $32 cents, or 0.5 percent, at $62.69 a barrel by 07:55 GMT, after falling 90 cents in the previous session. I have decided that the best way to explain what cold weather does to Britain is to use an analogy: snow to Britain is what kryptonite is to Superman. It has totally immobilised things, and has meant that all logic has gone out the window. There has been more snow today, yet more transport is running, how does that work? But what has this got to do with the oil market? Well, seemingly for some, logic has gone of the window, as U.S. rigs increase, U.S. production increases, demand figures elusive, crude prices rise. There is also a new U.S.-Russian rivalry developing. Previously, it was a superstate emergence battle in the 19th century, then a war of ideologies between communism v Western capitalism, the space race, cyber warfare, and now oil. The U.S. is predicted to overtake Russia in production by 2019. With this happening, I'm sure that with their history, Russia is seething at the States's ability to increase production, while Russia is stuck in its agreement with OPEC. Like a caged animal, they will be chomping at the bit to get increasing levels again. Asia industry data has been weak, knocking confidence in their ability to be the powerhouse of the demand growth - especially pertinent for China and India. Let's see what the rest of the week brings.

Fuel Oil Market (February 27)

The front crack opened at -11.50, strengthening to -11.45, before weakening to -11.50, closing -11.45. The Cal 19 was valued at -15.50. .

Asia's high-sulphur fuel oil crack for March widened its discount to Brent crude on Tuesday, slipping to a four-week low amid limited trade activity and weak market sentiment.

The front-month 180 cSt fuel oil crack to Brent settled at minus $8.24 a barrel, its widest discount since Jan. 29 when it was at minus $8.76 a barrel.

The weaker fuel oil crack came despite lower crude prices on Tuesday amid concerns about rising U.S. oil output offsetting signs of stronger demand and faith in the ability of OPEC production curbs to curtail supply.

Market sentiment has been weighed down in recent weeks by sluggish demand and a slight overhang in supplies.

Economic Data and Events

* 12pm: MBA Mortgage Applications, Feb. 23

* 1:30pm: U.S. Personal Consumption, 4Q

* 1:30pm: U.S. GDP, 4Q

* 2:45pm: U.S. Chicago Purchasing Manager, Feb.

* 3:30pm: EIA issues weekly U.S. oil inventory report

* EIA releases Petroleum Supply Monthly

* Genscape weekly ARA crude stockpiles report

* Saudi Aramco is expected to release March LPG prices

* Primorsk diesel loading program for March

* Fed Chairman Jerome Powell to testify before House Financial Services Committee

Singapore 380 cSt

Mar18 - 361.50 / 363.50

Apr18 - 361.00 / 363.00

May18 - 360.50 / 362.50

Jun18 - 359.75 / 361.75

Jul18 - 358.75 / 360.75

Aug18 - 357.50 / 359.50

Q2-18 - 360.50 / 362.50

Q3-18 - 357.50 / 359.50

Q4-18 - 351.75 / 354.25

Q1-19 - 343.50 / 346.00

CAL19 - 313.50 / 317.50

CAL20 - 237.00 / 245.00

Singapore 180 cSt

Mar18 - 368.75 / 370.75

Apr18 - 368.00 / 370.00

May18 - 367.50 / 369.50

Jun18 - 366.75 / 368.75

Jul18 - 365.75 / 367.75

Aug18 - 364.50 / 366.50

Q2-18 - 367.50 / 369.50

Q3-18 - 364.50 / 366.50

Q4-18 - 358.75 / 361.25

Q1-19 - 351.25 / 353.75

CAL19 - 323.00 / 327.00

CAL20 - 253.00 / 261.00

Rotterdam Barges

Mar18 348.00 / 350.00

Apr18 348.50 / 350.50

May18 348.00 / 350.00

Jun18 347.25 / 349.25

Jul18 345.75 / 347.75

Aug18 344.00 / 346.00

Q2-18 348.00 / 350.00

Q3-18 344.00 / 346.00

Q4-18 334.75 / 337.25

Q1-19 326.25 / 328.75

CAL19 290.75 / 294.75

CAL20 220.75 / 228.75


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Turkish shipyard Akdeniz orders diesel-electric propulsion package for an 8,000-dwt vessel destined for Transka Tankers.

Ningyuan Diankun vessel. China Classification Society certifies 740-teu pure-electric container ship  

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UK ETS and FuelEU Maritime event graphic. Lloyd’s Register to host UK ETS and FuelEU Maritime briefing in London  

Event on 12 May will examine maritime emissions regulations ahead of UK ETS expansion.

Ruri Planet vessel. Japanese shipbuilder delivers dual-fuel LNG bulk carrier Ruri Planet  

The 209,000-tonne Capesize vessel can run on heavy fuel oil or LNG.

L&T Energy GreenTech and Itochu agreement signing. L&T Energy GreenTech signs 300,000-tonne green ammonia supply deal with Itochu  

Indian firm to supply Japanese trading house from planned Kandla facility for marine fuel applications.

CMA CGM Iron vessel. Methanol-powered container ship is named CMA CGM D’Artagnan  

French shipping group adds vessel to methanol fleet as part of net-zero target.

Maersk Tahiti vessel. Bound4blue completes second suction sail installation for Maersk Tankers  

Four 24-metre eSAIL units fitted on Maersk Tahiti at Chinese shipyard in April.

Aerial view of Port of Yokohama. Asia-Pacific ports advance cross-sector hydrogen and e-fuel infrastructure  

Accelleron report highlights a coordinated approach combining energy, industry and shipping demand to stimulate market development.