CITIC Futures: Low-sulfur fuel oil follows crude oil to fluctuate at high levels

Low-sulfur fuel oil follows crude oil at high levels of fluctuation, with the current market focusing on the progress of geopolitical developments; the main product attributes of low-sulfur fuel oil are strong. During this round of oil price increases, the valuation of low-sulfur fuel oil has significantly recovered compared to crude oil and asphalt, with profits greatly revised upward. Low-sulfur fuel oil faces bearish factors such as declining shipping demand, green energy replacements, and high-sulfur fuel oil substitutes. After a sharp rise in the cracking spread of low-sulfur fuel oil, the price difference between low-sulfur fuel oil and asphalt has returned to high levels, with valuations in a neutral to slightly high range. The main product attributes cause the cracking spread of low-sulfur fuel oil to strengthen during crude oil price rises; on the fundamentals side, the export rebate rate for low-sulfur fuel oil has an advantage over refined oil, and the pressure to reduce oil and increase chemical conversion is likely to be transmitted to low-sulfur fuel oil. (CITIC Futures)