CITIC Futures: Fuel oil futures prices follow crude oil prices upward

Geopolitical situations remain the core driver of current oil prices, with fuel oil futures following crude oil’s rebound from lows.
Fuel oil has a high import dependence and strong geopolitical attributes; tense Iran geopolitical tensions not only affect Iran’s fuel oil export expectations and Middle Eastern fuel oil export outlooks but also impact Middle Eastern natural gas supply expectations.
The energy crisis effect drives a sharp increase in fuel oil futures prices, while rising freight costs also contribute to the fuel oil rebound.
Singapore’s fuel oil crack spread at high levels suppresses refinery feedstock demand and power generation demand.
In the medium to long term, Middle Eastern fuel oil power generation demand is gradually being replaced by natural gas and photovoltaic energy, forming a long-term bearish outlook for high-sulfur fuel oil: after Saudi Arabia’s fuel oil power demand is replaced, Saudi Arabia is expected to increase fuel oil exports;
The asphalt-fuel oil spread rebounds, and geopolitical escalation has a significant impact on this spread.
(CITIC Futures)

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