Tue 19 Jun 2018, 10:17 GMT

Oil and fuel oil hedging market update


By the Oil Desk at Freight Investor Services.



Commentary

Brent crude futures were at $78.05 per barrel at 0021 GMT, down 29 cents, or 0.4 percent, from their last close. U.S. WTI crude futures were at $65.63 a barrel, down 22 cents, or 0.3 percent. Like the Tunisian defender marking Harry Kane, China-U.S. trade tensions are trying to slam crude prices down to the floor; however, they are still being fairly resistant. Bullish pressure is coming from OPEC - especially the smaller members. Let's face it, Russia and Saudi Arabia are now not as heavily reliant on crude income as, say, a Nigeria or a Libya. The latter wants prices as high as possible, owing to political uncertainties, meaning they aren't able to just crank up production. Russia and Saudi are different. Therefore all eyes will be on Vienna on Sunday to see what comes out of the latest meeting. What about the hedge funds and other money managers, I hear you ask? Well they are quietly cutting their combined net long position in the six most important petroleum futures and options contracts by 18 million barrels in the week to June 12. The biggest move is in the fuels, with crude contracts now finding a balanced level. Bring on the rest of the week.

Fuel Oil Market (June 18)

The front crack opened at -9.70, weakening to -10.15, before strengthening to -10.05. The Cal 19 was valued at -16.60

Asia's July fuel oil viscosity spread stayed at $10.75 a tonne on Monday, unchanged since June 12 but down from $12 at the start of the month. The viscosity spread is the price differential between 180 cSt and 380 cSt fuel oil and the value reflects how strong or weak the fuel oil market is. Overall fuel oil supplies were high, with inventories of the fuel held in the ARA refining and storage hub reaching an 8- 1/2 month high of 1.48 million tonnes in the week to June 14. This came just days after Singapore fuel oil stocks were also up, but at a two-week high of 20 million barrels in the week to June 13, official data showed. Japanese refiners Cosmo Oil and JXTG were affected by the earthquake which prompted them to either partially or totally halt operations although the moves were not expected to affect oil products output or shipment.

Economic data/events (Times are London.)

* 1:30pm: U.S. Housing Starts, May, est. 1311k, prior 1287k

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

* Bloomberg-compiled REFINERY SNAPSHOT, looking at key outages at refineries in the U.S. and Canada, and providing offline capacity projections for crude units and FCCs

* See OIL WEEKLY AGENDA for this week’s events

Singapore 380 cSt

Jul18 - 424.25 / 426.25

Aug18 - 419.75 / 421.75

Sep18 - 415.25 / 417.25

Oct18 - 411.25 / 413.25

Nov18 - 407.75 / 409.75

Dec18 - 404.50 / 406.50

Q3-18 - 419.75 / 421.75

Q4-18 - 408.25 / 410.25

Q1-19 - 398.00 / 400.50

Q2-19 - 388.00 / 390.50

CAL19 - 363.00 / 366.00

CAL20 - 288.00 / 293.00

Singapore 180 cSt

Jul18 - 434.75 / 436.75

Aug18 - 430.50 / 432.50

Sep18 - 425.75 / 427.75

Oct18 - 422.00 / 424.00

Nov18 - 418.75 / 420.75

Dec18 - 415.75 / 417.75

Q3-18 - 430.50 / 432.50

Q4-18 - 419.50 / 421.50

Q1-19 - 409.75 / 412.25

Q2-19 - 399.75 / 402.25

CAL19 - 377.50 / 380.50

CAL20 - 311.50 / 316.50

Rotterdam 3.5%

Jul18 - 407.25 / 409.25

Aug18 - 403.75 / 405.75

Sep18 - 399.50 / 401.50

Oct18 - 395.25 / 397.25

Nov18 - 391.00 / 393.00

Dec18 - 386.75 / 388.75

Q3-18 - 403.50 / 405.50

Q4-18 - 391.00 / 393.00

Q1-19 - 380.75 / 383.25

Q2-19 - 367.25 / 369.75

CAL19 - 341.50 / 344.50

CAL20 - 274.50 / 279.50


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