Consecutive rising pattern of international crude oil prices become the dominant factor affecting fuel oil

This week, Shanghai fuel oil continued to fluctuate and rose. On Thursday, it refreshed this year's high of 3,250 yuan (ton price, the same below). Relative to the international crude oil prices, the fuel oil trend appears to be more stable, which largely benefits from the strong spot price and the price difference between periods. This week, the price of Singapore's fuel sleeves has dropped slightly, to 314 US dollars, down 4% from last week; while New York crude oil futures and Shanghai fuel oil futures rose 3.4% and 1% respectively. The price-to-price relationship between Singapore's fuel oil and international crude oil, domestic fuel oil, and futures are all improving, and the market is becoming more rational.
The dominant factor affecting fuel oil at present is the international crude oil price, and it is greater than ever before. Data from the Customs show that China’s fuel oil imports in August fell for the seventh consecutive month, only 1.96 million tons, a decrease of 10.3% compared with the same period last year. From January to August, fuel oil imports fell by 15.8% to 17.49 million tons. The fuel oil imported from Russia in August increased by 76.2% compared to the same period of last year to 616,073 tons, reflecting the strong demand from small refineries. However, the profit margin of small refineries has been significantly reduced recently, and there is a sign of a drop in demand.
The US Department of Energy estimates that due to problems caused by Hurricanes Katrina and Rita, 15% of the refining capacity will at least be shut down for a few more weeks, and the market's worries about supply have not been lifted. Driven by the strengthening of refined oil prices, crude oil prices climbed once again, and the US$63 defense line was consolidated once again, and the bullish confidence was significantly strengthened. In the long run, the crude oil market is more dependent on OPEC's production capacity, but the current situation is not optimistic.
Huangpu fuel oil market is tight and inventory levels are extremely low, while import costs are still 150-200 yuan higher than futures prices. Therefore, under the background that crude oil prices maintain an upward trend, the possibility that short-term fuel oil prices will continue to rise is high. The eleven holiday factor objectively accelerates the return of futures prices to spot prices.

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