Summary
Supply: Global crude oil supply is expected to increase as OPEC continues to raise production levels, which may lead to a decline in fuel oil prices. Maintenance activities in Middle Eastern and Russian refineries will continue to support fuel oil supply recovery. However, demand for secondary raw materials from refineries in India and China remains low, limiting overall fuel oil demand growth.
Demand: Ship fuel and power generation demand for fuel oil has performed relatively well. However, the lack of growth in secondary raw material demand from refineries in India and China indicates limited overall fuel oil demand.
Inventory: Global fuel oil inventories remain high, with significant stockpiles in Singapore, Fujairah, Europe, and the United States. The inventory levels in these regions are expected to continue rising.
Price & Spread: The volatility of global fuel oil prices has decreased, and all premiums caused by geopolitical risks have been eliminated. The price of HSFO is relatively weaker than LSFO, showing a slight downward trend, while the price of LSFO is relatively firm. The spread between HSFO and LSFO FOB prices in Singapore has narrowed, and the premium structure has shifted from discounts to premiums for both FU and LU contracts.
Import & Export: China's fuel oil imports and exports have both decreased compared to the previous week. Global HSFO and LSFO import and export volumes have also decreased, with exports from Russia, the Middle East, Latin America, and Singapore remaining low.
Futures Market: The prices of fuel oil futures contracts have adjusted narrowly, and the premium structure has shifted from discounts to premiums for both FU and LU contracts. The trading volume and open interest of fuel oil futures contracts have decreased.
Conclusion: The global fuel oil market is expected to continue to face downward pressure due to oversupply. The focus of market trading has shifted towards fundamentals, with crude oil prices and refining capacity playing key roles. LSFO is expected to remain relatively firm due to supply constraints, while HSFO prices may continue to decline.
