Over the counter

Baltic Briefing meets Will Chambers, head of tanker FFAs at Baltic panellist firm Oil Brokerage Limited

Walking into the Oil Brokerage office, a buzz of activity was instantly discernible. Will Chambers, the firm’s head of tanker FFAs was called away to deal with an order that had come through just as Baltic Briefing’s correspondent arrived. Watching Will and his team execute the order was a good introduction to the world of FFA trading – in a word, FAST. Communicating succinctly with each other, the team quickly concluded the business.

Oil Brokerage started trading in 1988 as a broker of physical gasoline, specialising in north west European cargoes, barges and components. Its customer base developed over time and now ranges from oil majors to commodity trading houses, investment banks and hedge funds with global operations.

Having previously brokered FFAs at Marex Spectron, Chambers joined Oil Brokerage in July 2016 and was keen for the company to become a Baltic panellist as soon as possible.

“The Baltic has a professional reputation and people trust it and its numbers – we want to be part of that,” says Chambers.

The company has six FFA brokers in London and two in Singapore who contribute numbers on a daily basis that are then analysed by Chambers and in due course sent as the company’s Baltic Forward Assessment (BFA) Dirty and BFA Clean submissions.

According to Chambers, FFA volumes are “pretty decent” at the moment, especially for Asia, with a good geographical spread worldwide and American players becoming more involved in the market. Oil Brokerage itself has a wide range of client profiles and is well placed to gauge the appetite of the market as a whole.

Integrated broking service

Across its markets, including FFAs, Oil Brokerage offers an integrated broking service, catering for clients with Asian, European and American interests. As one of the world’s largest independent oil broking firms, it has an excellent viewpoint. Bearing this in mind, it was encouraging to hear Chambers and company director James McNicol concurring that there is far too much pessimism in the freight market, especially given the likelihood of US oil exports steadily increasing over the next five years.

“The over-riding pessimism is unnecessary – freight rates in general will pick up in two if not five years and vessel values with them,” says McNicol.

James McNicol also believes that “the market east of Suez is becoming more sophisticated” from an FFA trading perspective, strengthening the outlook for the FFA market. While there is still a gap between people using FFAs as a hedging tool and trading them in a proprietary manner, he says that there are an increasing number of savvy traders ready to ramp up activity when the time is right.

Oil Brokerage began reporting on Baltic Forward Assessments for Tankers (BFA Dirty and Clean) on 1 November 2016.

Click here for further information on Baltic Exchange FFA information.

The Baltic Exchange Forward Assessment for Dirty

TD3 – 265,000mt ME Gulf to Japan
TD7 – 80,000mt North Sea to Cont
TD8 – 80,000mt Kuwait-Singapore (Crude/DPP Heat 135F)
TD20 – 130,000mt W Africa to Cont

The Baltic Exchange Forward Assessment for Clean

TC2 – 37,000mt Continent to USAC
TC5 – 55,000mt Middle East to Japan
TC6 – 30,000mt Algeria/Euromed
TC7 – 30,000mt Singapore to east coast Australia (CCP)
TC9  – 30,000mt Primorsk to Le Havre
TC12 – 35,000mt Naphtha Sikka (WCI) to Japan
TC14 – 38,000mt US Gulf to Continent

Baltic Exchange Forward Assessment for Dirty Panellists

BFA Dirty is based on the average of assessments made by a panel of FFA brokers.

Baltic Exchange Forward Assessment for Clean Panellists

BFA Clean is based on the average of assessments made by a panel of FFA brokers.