Brent crude oil fell below the $80/barrel mark, and the main 2305 contract of fuel oil futures fell 4.08%

International oil prices hit a new low this year!

International oil prices plummeted

On Tuesday (December 6), international oil prices fell
significantly.
As of the close of the day, the main contract of WTI crude oil futures fell $2.
68 / barrel to close at $74.
25 / barrel, down 3.
48%, and hit the lowest level of 73.
41 US dollars / barrel this year; The main contract for Brent crude futures fell $3.
33 a barrel, or 4.
03%,
to close at $79.
35 a barrel.

In the domestic market, as of the close of the night, the main contract of SC crude oil fell 6.
89% to 517.
2 yuan / barrel
.

The U.
S.
Energy Information Administration (EIA) on Tuesday edged up its crude production forecast for this year, expecting oil demand growth to be weaker than expected
.

EIA expects U.
S.
crude oil production to rise to 11.
87 million b/d in 2022, compared with its previous estimate of 11.
83 million b/d
.
EIA expects U.
S.
crude oil production to rise to 12.
34 million b/d
in 2023.

The EIA on Tuesday (Dec.
6) lowered its forecast for global oil demand growth in 2023 by 160,000 b/d to 1 million b/d
.
In its monthly report, EIA maintained its 2022 oil demand growth forecast unchanged
.

The EIA lowered its price forecasts for 2022 and 2023 to $101.
48/b and $92.
36/b respectively, compared to $102.
13/b and $95.
33/b
respectively.

High and low fuel oil fell together

Yesterday (December 6), the overall performance of the energy sector in the domestic commodity market was not good
.
Crude oil prices fell sharply, driving fuel oil and low-sulfur fuel oil prices down sharply, with the main 2305 contract of fuel oil futures down 4.
08% and the main 2302 contract of low-sulfur fuel oil futures down 4.
19%
as of the close of the afternoon.

Zheng Mengqi, a researcher at Haizheng Futures Energy, said that Saudi Aramco set the average price of Arab light crude oil sold to Asia in January at a discount of $2.
20 per barrel compared with the average price of Oman and Dubai; Set the official selling price of Arabian Light oil sold to the United States at a premium of US$6.
35/b to Argus sour crude; Set the official selling price of Arab Light oil destined for northwestern Europe at a discount of $0.
10/b
to the settlement price of Brent crude.
Saudi Arabia lowered the price of most of the oil sold to Asia in January, which also reflects the relatively weak demand in Asia, coupled with Russian crude oil sanctions by Europe and the United States, most of the sea freight flows into Asia, the upper limit of the European Union's price of Russian oil is set at 60 US dollars / barrel, higher than the current crude oil price sold at a discount in Russia, which has little impact on Russian crude oil supply, and the internal crude oil price is under pressure, falling to the level of the end of January this year, and the oil price rise driven by the Russian-Ukrainian conflict has all been given up
.
U.
S.
crude oil has been discounted in recent months, crude oil prices have been weak, and fuel oil and low-sulfur fuel oil prices have also weakened
.

Dai Yifan, director of the Commodity Research Center of the South China Research Institute, said that international crude oil prices fell sharply on Monday night, pushing for a sharp plunge in the opening of fuel oil and low-sulfur fuel oil yesterday
.
Diesel cracking in Singapore fell sharply yesterday, leading to a weakening
of low-sulphur cracking.
For high-sulfur fuel oil, Singapore's high-sulphur storage stocks rose by 740,000 tonnes last week to 1.
684 million tonnes, a major factor
inhibiting cracking of high-sulphur fuel oil.

From their own fundamental point of view, Zheng Mengqi analyzed that high-sulfur fuel oil is still affected by the large amount of Russian goods flowing into Asia, resulting in greater pressure on the supply side; Low-sulfur fuel oil will gradually loosen due to the decline in diesel cracking high level, the diversion effect has declined, and the supply will gradually be loosened
next year with the launch of new capacity of Kuwait's hydrodesulfurization unit.

Dai Yifan said that at present, the global ship transportation capacity tends to be stable, the proportion of high-sulfur fuel oil and low-sulfur fuel oil ship fuel consumption is basically stable, the marine fuel market has limited boost to high- and low-sulfur fuel oil, and the overall supply and demand level has not changed much
.
However, the price operation logic of high and low sulfur fuel oil shows significant differences, low sulfur fuel oil mainly follows the logic of the refined oil market, and high sulfur fuel oil mainly follows the logic
of raw materials.

Dai Jialing, a researcher at Zhongrong Huixin Futures, said that on the supply side, the price limit for crude oil for Russia is set at $60 / barrel, and with the official landing of this sanction, Russia's crude oil production will decline, and the output of high-sulfur fuel oil will also decline
in the later stage.
In terms of low-sulfur fuel oil, overseas gasoline and diesel prices are still relatively strong, refiners are more inclined to produce gasoline and diesel, and there is no obvious pressure
on the supply of low-sulfur fuel oil.

In terms of demand, the marine oil market is relatively stable, the demand is general, and the demand support is greater when it comes to high and low sulfur fuel oil
.
In terms of power generation, the purchase of low-sulfur fuel oil in Japan, South Korea and other countries is gradually increasing, which also brings strong support
to low-sulfur fuel oil.

In terms of inventory, there is no pressure
overall.
As of November 30, Singapore's fuel oil inventories were 19.
894 million barrels, an increase of 0.
84%.

Fujairah heavy oil stocks fell by 1.
213 million barrels to 13.
213 million barrels
.

On the cost front, OPEC+ maintained its current 2 million b/d production cut plan at its December meeting; The EU's limit on Russian crude oil is $60 per barrel, which may lead to a decline in Russian crude oil exports, and overall crude oil supply remains relatively tight
.
Demand is still affected by the global recession, and the market is worried about the growth rate of crude oil demand, and it is expected that crude oil at the cost end will remain highly volatile
.

Looking forward to the future market, Dai Yifan said that in addition to the interference of crude oil, the main logic affecting the trend of high and low sulfur fuel oil is the change in the structure of the foreign refined oil market, due to the sharp increase in domestic refined oil exports, suppressing the profits of foreign refined oil cracking, gasoline has been maintained at a low level, diesel has also begun to fall from a high level, and the entire refined oil market began to change from structural imbalance to structural balance
。 Low sulfur fuel oil and international gasoline and diesel prices have a strong correlation, gasoline cracking price spread has been inverted, maintaining low sulfur fuel oil crack price difference is mainly diesel, the current diesel crack price spread decline led to low sulfur fuel oil cracking price spread in a sluggish state
.
For high-sulfur fuel oil, the main factors affecting the cracking price in the short term are the inventory changes of Singapore's high-sulfur oil floating warehouse and the domestic demand
for incoming processing of straight-boiled fuel oil.
In the short term, both high-sulfur and low-sulfur fuel oil will remain weak
.
In the medium and long term, the foreign refined oil market from structural imbalance to balance is still a general trend, low-sulfur fuel oil will still be suppressed, the valuation of high-sulfur fuel oil will gradually repair, and the high-low sulfur price spread is expected to continue to contract.

Zheng Mengqi said that the current valuation of fuel oil is at a low level, which is greatly affected by the price of crude oil at the cost end, and the absolute value fluctuates
with oil prices.
Before the landing of the Russian refined oil embargo on February 5 next year, the high sulfur fuel oil cracking spread may remain relatively low while the inflow of Russian goods into Asia is still high
.
The high and low sulfur price difference is at a high level, the high sulfur fuel oil economy is better, it is necessary to wait for the demand replacement brought by its low price advantage, coupled with the growth expectation of low sulfur fuel oil supply, in the long run, the high and low sulfur price difference is expected to return
.

Jin Xiao, chief energy analyst of Orient Derivatives Research Institute, said that at present, both the high-sulfur fuel oil cracking spread and the low-sulfur fuel oil cracking spread are at a very low level, and the low-sulfur fuel oil cracking spread has returned to a single-digit level, and the high-sulfur fuel oil cracking spread is hovering
around -$30 per barrel.
Both high-sulfur fuel oil and low-sulfur fuel oil face similar difficulties, with valuations low enough but lack of drive due to weak demand
.
Both the monthly difference and spot of low-sulfur fuel oil have strengthened, but sustainability remains in doubt
.
The fourth quarter is usually the peak season for low-sulfur fuel oil consumption, but domestic demand is still in a suppressed state, and it is expected that it will be difficult to improve before the end of
winter.