Platts to launch settle-based US fuel oil swaps assessments

  • Additional USGC HSFO, New York 1%S and USGC marine fuel 0.5%S swaps to be calculated using ICE Brent settles
  • No changes to existing fuel oil derivative, forward curve assessments

Platts, a part of S&P Global Commodity Insights, will launch new daily derivative assessments of select prompt months of the USGC HSFO, New York 1%S and USGC marine fuel 0.5%S fuel oil curves that will be assessed using ICE Brent settles, effective Nov. 1, 2022.

Some of Platts' physical fuel oil assessments are assessed with the aid of fuel oil derivatives. Platts will reference these new derivatives to form the underlying strips in the assessment process for all US fuel oil physical assessments beginning in November.

The assessments will be in addition to the existing suite of US fuel oil derivative assessments. There will be no change to the existing fuel oil derivative assessments, forward curves and related calculations, such as cracks.

Fuel oil swaps

Platts assesses fuel oil derivatives including USGC HSFO, USAC 1%S fuel oil and USGC marine fuel 0.5%S. The values for these derivatives are determined in a variety of ways, including from indications on a crack basis which are applied to the months underlying Brent frontline derivative.

Platts' ICE Brent frontline is formed using Platts' assessments of the ICE Brent futures at the 2:30 pm ET market close. The Platts assessed value of these futures contracts can vary from the daily settlement due to differing methodologies.

Platts will be launching new derivative assessments for the balance month and first three months for USGC HSFO, USAC 1%S and USGC marine fuel 0.5%S, and the basis for these new assessments will come from a Brent frontline derivative value that is calculated from ICE Brent settles rather than Platts' assessment of those futures contracts.

The balance month derivative will be assessed up to and including the 15th of each month.

The only difference between the new assessments and the existing fuel oil derivative assessments will be the Brent value input used to determine the flat price. Platts understands that market participants typically use the ICE Brent settlement value for the physical assessments rather than the Platts Brent futures assessment.

Physical assessments

Platts' US physical fuel oil assessments are typically made in part by using a strip to determine the value of the physical market across a forward delivery or loading window. The strip represents the value the market assigns to future Platts assessments through trading in Platts-related, monthly derivatives.

The new derivative fuel oil assessments will be used in the US physical fuel oil markets where strips are used to determine the value of the future physical market, such as USGC HSFO, USGC marine fuel 0.5%S and New York 1%S. These new assessments are meant to be aligned with the way market participants calculate the underlying derivatives for the physical market.

In publications where the swap data is published alongside the physical market assessments, the new swap assessments will be published instead.

Please send all questions and comments to oilgroup@spglobal.com and pricegroup@spglobal.com.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.

Affected Physical Assessment: USGC HSFO (PUAFZ00)

Proposed new assessments:

USGC HSFO Waterborne (Settle) Financial BalMo

USGC HSFO Waterborne (Settle) Financial Mo01

USGC HSFO Waterborne (Settle) Financial Mo02

USGC HSFO Waterborne (Settle) Financial Mo03

Affected Physical Assessment: USGC Marine Fuel 0.5%S (AUGMA00/AUGMB00)

Proposed new assessments:

Marine Fuel USGC 0.5% (Settle) Financial BalMo

Marine Fuel USGC 0.5% (Settle) Financial Mo01

Marine Fuel USGC 0.5% (Settle) Financial Mo02

Marine Fuel USGC 0.5% (Settle) Financial Mo03

Affected Physical Assessment: FO No.6 1.0% New York Harbor Delivered Cargo (PUAAO00)

Proposed new assessments:

FO 1.0% USAC Cargo (Settle) Financial BalMo

FO 1.0% USAC Cargo (Settle) Financial Mo01

FO 1.0% USAC Cargo (Settle) Financial Mo02

FO 1.0% USAC Cargo (Settle) Financial Mo03