CITIC Futures: Geopolitical disturbances, asphalt futures fluctuate within a wide range

Geopolitical tensions remain the core influencing factor on current oil prices, with crude oil fluctuating at high levels, asphalt futures experiencing wide-range volatility, and the asphalt-fuel oil spread rebounding. The key factors are sustained refinery production cuts and cooling of geopolitical premiums. Considering that asphalt’s geopolitical attributes are weaker than fuel oil, during geopolitical tensions, the asphalt-fuel oil spread tends to decline, while easing tensions lead to a rebound in the spread; refined oil profits are high, and under the trend of reducing refining and increasing oil production, asphalt output is expected to be diverted. On the demand side, fixed asset investment in transportation is negative growth, and data from Steel Union shows that asphalt refinery operating rates are at five-year lows, with no significant inventory reduction, confirming weak asphalt demand. Currently, asphalt futures are undervalued compared to fuel oil and overvalued relative to rebar. (CITIC Futures)