On Friday, fuel oil futures continued to be strong. After the main FU2701 contract closed up more than 2% last night, the daily market rose further. The highest intraday increase reached 6%. The low-sulphur fuel oil LU2612 rose nearly 6% at the same time. LU and FU resonate, but the supply conflict for high sulfur is even more acute. The drive for this round of growth has changed from an “emotional premium” to a “physical gap.” Geographically, Yemen's Houthis said in a statement on the 22nd that they have launched four military operations against targets in Saudi Arabia in the past 48 hours, using ballistic missiles and drones to attack the Ministry of Defense building in Riyadh, King Fahd International Airport in Dammam, Saudi Aramco oil facilities in Yanbu, and Abha International Airport. Among them, an attack on an American facility in Yanbu “caused a fire at the scene.” Yanbu is one of the most important oil export terminals on Saudi Arabia's Red Sea coast. The attack on the facility meant that the “backup export channel” that bypasses Hormuz itself is also beginning to be exposed to risk. Meanwhile, the frequency of attacks on oil tankers in the Strait of Hormuz is still rising. Iran's conditions for reopening the strait have not changed, and the geo-risk premium is not showing a path of systemic decline in the short term. What is more noteworthy is the quantitative reduction on the supply side. Unlike crude oil, fuel oil lacks alternative transportation space for pipeline transfer and ship-to-ship transit. The carrier type is smaller and the insurance rate is higher. The impact of blocked passage through the strait is far greater than that of crude oil itself. The operating rate dropped sharply after refinery facilities in many parts of the Middle East were damaged. High differences in diesel cracking prices also prompted refineries to shift production schedules towards diesel, and fuel oil output was passively compressed. As far as the future market is concerned, the basis for the short-term high and strong fuel oil pattern is still solid, but the volatility rate has already entered a range where position management needs to be re-examined. The trend of fuel oil is clearly stronger than that of related oil products, and high level fluctuations increase accordingly. It is not advisable to blindly operate against the trend; the focus is on short-term ideas.
Zhitongcaijing · 1d ago
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On Friday, fuel oil futures continued to be strong. After the main FU2701 contract closed up more than 2% last night, the daily market rose further. The highest intraday increase reached 6%. The low-sulphur fuel oil LU2612 rose nearly 6% at the same time. LU and FU resonate, but the supply conflict for high sulfur is even more acute. The drive for this round of growth has changed from an “emotional premium” to a “physical gap.” Geographically, Yemen's Houthis said in a statement on the 22nd that they have launched four military operations against targets in Saudi Arabia in the past 48 hours, using ballistic missiles and drones to attack the Ministry of Defense building in Riyadh, King Fahd International Airport in Dammam, Saudi Aramco oil facilities in Yanbu, and Abha International Airport. Among them, an attack on an American facility in Yanbu “caused a fire at the scene.” Yanbu is one of the most important oil export terminals on Saudi Arabia's Red Sea coast. The attack on the facility meant that the “backup export channel” that bypasses Hormuz itself is also beginning to be exposed to risk. Meanwhile, the frequency of attacks on oil tankers in the Strait of Hormuz is still rising. Iran's conditions for reopening the strait have not changed, and the geo-risk premium is not showing a path of systemic decline in the short term. What is more noteworthy is the quantitative reduction on the supply side. Unlike crude oil, fuel oil lacks alternative transportation space for pipeline transfer and ship-to-ship transit. The carrier type is smaller and the insurance rate is higher. The impact of blocked passage through the strait is far greater than that of crude oil itself. The operating rate dropped sharply after refinery facilities in many parts of the Middle East were damaged. High differences in diesel cracking prices also prompted refineries to shift production schedules towards diesel, and fuel oil output was passively compressed. As far as the future market is concerned, the basis for the short-term high and strong fuel oil pattern is still solid, but the volatility rate has already entered a range where position management needs to be re-examined. The trend of fuel oil is clearly stronger than that of related oil products, and high level fluctuations increase accordingly. It is not advisable to blindly operate against the trend; the focus is on short-term ideas.
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