Short-term supply continues to increase Fuel oil or range-bound is expected

1.
On the supply side, the spread of Singapore's 0.
5% sulfur bunker fuel oil to Brent crude oil has fallen sharply in the past two weeks, and it is expected that a large number of low-sulfur fuel oil cargoes will enter the Singapore market in the coming weeks, and the arbitrage of low-sulfur fuel oil from the West in January will be higher than in December, and the fundamentals of the low-sulfur fuel oil market will be affected
.
The high-sulfur fuel oil market continues to face the problem of adequate supply, and Russian fuel oil shipments still show no signs of
a significant decline.
The overall supply of fuel oil in Singapore is expected to continue to increase
next month.

2.
In terms of demand, next month will usher in the traditional Spring Festival holiday, and the demand for marine fuel at the shipping end may be affected
.
In addition, because Japan and South Korea already have sufficient reserves, even during the peak winter season, the demand for low-sulfur fuel oil power generation has not increased
significantly.
Affected by the holiday, the demand for high-sulfur fuel oil refining feedstock and ship fuel will also decline
slightly.

3.
In terms of oil prices, the cold wave weather in the United States in the past two weeks has affected the refinery capacity of about 6 million barrels per day, resulting in the loss of about 20 million barrels of refined oil supply, so refined oil inventories have declined in the past two weeks; However, at the same time, due to the influence of cold wave weather, aviation kerosene demand has been impacted, and gasoline and diesel demand has also declined
in the short term.
Judging from the latest refinery operating rates, U.
S.
refineries are gradually recovering from the cold snap
.
In addition, this week the Russian government announced that it would ban oil supplies to countries that comply with price caps set by Western countries, and could reduce oil production by 500,000-700,000 b/d early next year, equivalent to a 5% to 7%
cut.
From next year, Russia's crude oil and refined oil production and exports will decline substantially, which makes the supply side of the global oil market more vulnerable
.

4.
Overall, this month, the international oil price range fluctuated, and the Singapore fuel oil market fell first and then rose
.
In terms of high sulphur, high-sulphur fuel oil flows from Russia to Asian markets are expected to increase in the coming months, with shipments of 4.
45 million mt in December, down 140,000 mt from November, and oversupply will continue to weigh on Asian high-sulphur fuel oil sentiment
.
On the low-sulphur front, more low-sulphur arbitrage cargoes will also flow into Asia in the coming weeks, creating an oversupply situation
.
At the same time, low-sulphur fuel oil production in the region is expected to remain strong due to increased refinery production, while relatively weak diesel refining margins add to low-sulphur supply
.
In the short term, fuel oil itself lacks a clear upward drive, and it is expected that the absolute price may follow the range of crude oil
.