The easing of the epidemic is one of the important reasons why oil prices remain high. However, the recent resurgence of epidemics in European and American countries has disrupted the recovery path of crude oil demand from actual demand to expected demand.
Under normal circumstances, the vaccine rollout goes smoothly and crude oil demand recovers smoothly, so it is understandable to raise crude oil demand expectations. However, with the recent worsening of the epidemic and frequent vaccine issues, OPEC and IEA have still raised their crude oil demand expectations, driving oil prices to continue to rebound. If the yields on the “Ten Bonds” in the United States have boosted inflation expectations in the past few months, we need to be wary of whether inflation expectations can continue to rise. I am afraid there is not much room for upward inflation expectations. Although crude oil is still being destocked, it is an indisputable fact that the supply and demand gap in the crude oil market has narrowed and the destocking speed has slowed down. If Iranian and Venezuelan crude oil returns, will the fragile crude oil market be able to rely on strong demand to digest it as described by many investment banks? Adding new production capacity is a matter of opinion. If global crude oil demand is driven by China in 2020, and global crude oil demand is driven by European and American countries in 2021, realistically, Europe and the United States are disturbed by the epidemic, and demand recovery is blocked; it seems that except for jet fuel demand, other demands have returned to normal levels, EIA It is estimated that demand for jet fuel will fully recover in 2030, and the destocking of the supply and demand gap caused by the expected recovery in demand for transactions will still face challenges.
The absolute price of fuel oil follows crude oil. Crude oil prices have continued to rebound recently, driving the price of high-sulfur 380 fuel oil to continue to rebound. We believe that the absolute price of fuel oil has At the end of the day, companies should actively seize short hedging opportunities. The reasons are as follows:
1. The epidemic has repeatedly been beneficial to the cracking price of high-sulfur fuel oil and negative to the cracking price of finished products; while the improvement of the epidemic is the opposite. If we believe that the general direction of the future is Recovery, then the 380 crack spread should be bearish.
2. Under the background that OPEC+ crude oil production is gradually increasing and U.S. crude oil production is unlikely to increase significantly during the year, global refinery feedstock will transition from light to heavy, as reflected in Dubai —The Brent crude oil spread continues to weaken, putting pressure on the 380 crack spread.
3. Compared with the same period in 2020, the growth rate of Russian fuel oil production and export volume is close to that of the same period in 2019. In addition, Russia intends to lower crude oil export tariffs in the near future (crude oil and fuel oil export tariffs are consistent) , which may mean that Russian fuel oil production and exports will slowly increase.
4. OPEC+ crude oil production will gradually increase. The United States and India will gradually reduce the purchase of high-sulfur fuel oil and increase the purchase of crude oil from countries such as Saudi Arabia. Recently, we have seen that the United States Demand for fuel oil processing has gradually declined.
5. The support for the fuel oil market from the month-on-month increase in demand for power generation in Saudi Arabia will be significantly weakened. Recently, Saudi Arabia has stopped importing fuel oil from Singapore. On the one hand, this is due to the gradual increase in Saudi crude oil supply. The supply of fuel oil is gradually increasing. On the other hand, fuel oil is no longer more economical than natural gas for power generation. Saudi Arabia is expected to return to natural gas power generation. Even with the arrival of the peak power generation season, demand for fuel oil in Saudi Arabia has surged. Saudi Arabia is expected to purchase fuel oil from Europe and reduce demand for fuel oil from Singapore.
6. From the perspective of position holdings, this round of FU relied on the sharp reduction of short positions to achieve a sharp rebound in futures prices. The main driver was the rebound of crude oil. Currently, there is no sign of active squeezing by bulls. The monthly difference is still negative, and the low domestic and foreign price difference is a supporting factor for FU, which relies entirely on imports. However, as the supply of fuel oil in Singapore increases and demand falls, the domestic and foreign price difference does not rule out a trend of first expanding and then shrinking.
The main risk points are the unexpected rise in crude oil prices and the unexpected decline in fuel oil supply. </p
