On October 23, the domestic oil futures market saw all sectors in the crude oil segment registering gains. The main contract for fuel oil opened at 3,055.00 yuan per ton, experiencing high volatility throughout the day. By the midday close, the fuel oil contract reached a peak of 3,151.00 yuan and dipped to a low of 3,052.00 yuan, reflecting a rise of 4.42%.
As of the market’s closing, the latest price for crude oil futures stood at 544.7 yuan, with a gain of 11.2 yuan, or an increase of 2.10%.
Currently, the fuel oil market is exhibiting an upward trend, with a relatively strong performance on the trading floor. Analysts are offering various insights on the future trajectory of fuel oil prices:
Ruidai Futures notes that China’s introduction of a series of economic stimulus measures has bolstered the market, while risks from geopolitical tensions in the Middle East persist, contributing to a rebound in international crude oil prices. The Singapore fuel oil market has seen a decline, with the price spread between low-sulfur and high-sulfur fuel oil narrowing to $122 per ton. The price spread between the LU2501 and FU2501 contracts has decreased by 5 yuan per ton from the previous trading day to 965 yuan. As international crude oil experiences a slight recovery, the gap between low and high sulfur futures contracts has also narrowed, leading to a consolidation in fuel oil prices. In the futures market, the FU2501 contract has seen an increase in both long and short positions, with a rise in net short positions. Technically, the FU2501 contract is testing resistance around 3,150 yuan, suggesting a focus on short-term trading. The LU2501 contract is also encountering resistance around 4,150 yuan, indicating a short-term consolidation trend.
Hengtai Futures reports that the domestic financial market has undergone significant volatility in the first week following the holiday, with high-cost oil prices fluctuating considerably. The core driver of this volatility remains geopolitical factors, compounded by a four-day decline in the domestic stock market that has notably affected market sentiment and increased oil price fluctuations, thereby influencing fuel prices. With market demand for fuel oil expected to remain subdued, the outlook for future demand appears weak. The recommended strategy is to adopt a wait-and-see approach.
Huatai Futures highlights that overnight trading saw a resurgence in both crude oil and fuel oil prices, with high-sulfur fuel oil nearing its highest rebound since September. Ongoing geopolitical conflicts continue to exert influence on oil prices. Although the supply of high-sulfur fuel oil remains tight, supporting price increases, the existing price differentials have reached elevated levels. Should demand from the Middle East for power generation decline and exports from Russia and Iran rise (provided geopolitical tensions do not escalate significantly), there could be room for a valuation correction in high-sulfur fuel oil. Meanwhile, low-sulfur fuel oil is supported by tighter domestic quotas in the fourth quarter and expectations of reduced domestic production. However, overseas remaining capacity remains relatively ample. In the medium term, given the surplus capacity and the replacement of downstream demand, the price differential between low-sulfur fuel oil and gasoline/diesel has reached its highest level in nearly two years, facing resistance from above. The recommended strategy is to maintain a neutral position, adopting a wait-and-see approach while considering short positions on the FU contract against the Brent crack spread.
Related topic:
What Is The Symbol For WTI Crude Oil Futures?