Huatai Futures: Tight Supply of Low-Sulfur Fuel Oil, Prices Expected to Continue Rising

Although Middle Eastern (excluding Kuwait) export products are mainly high sulfur, downstream refineries are reducing their output due to raw material shortages, which also leads to a decline in low sulfur fuel oil production. Additionally, the most prominent contradiction in current refined oil products is in medium distillates (aviation kerosene, diesel), which overlap with the blending components of low sulfur fuel oil, indirectly tightening the supply of low sulfur oil and increasing its valuation. From the perspective of crack spreads, low sulfur fuel oil still has some room to rise from the high levels seen in 2022. (Huatai Futures)