Report Summary 1) Report Industry Investment Rating - High-sulfur fuel oil: Sideways [3] - Low-sulfur fuel oil: Sideways [3] 2) Core Viewpoints - After the OPEC meeting's production increase was confirmed, crude oil prices remained firm, and the spot fundamentals were decent. The market expected that OPEC's actual production increase would be far less than the quota. With demand in the peak season, the pressure from new supply was limited. Thus, the unilateral prices of FU and LU were supported by the cost side, and there was limited downside in the short term [1]. - The high-sulfur fuel oil market structure was weak recently, with spot discounts, monthly spreads, and crack spreads declining, indicating relatively abundant spot supply. The demand for high-sulfur fuel oil might decline year-on-year, and Middle Eastern high-sulfur fuel oil shipments had increased significantly. The high-sulfur fuel oil crack spread might need further adjustment to attract incremental demand, and the market structure would find new support after full adjustment [1]. - In the short term, the supply pressure of low-sulfur fuel oil was limited, but there was no shortage expectation. From June, domestic low-sulfur fuel oil production might gradually recover from a low level, and Brazil's supply to the Asia-Pacific region had also increased. In the medium term, the carbon neutrality trend in the shipping industry would gradually replace the market share of low-sulfur fuel oil. Overall, the low-sulfur fuel oil market lacked a continuous upward driver [2]. - Currently, the market structure of low-sulfur fuel oil was slightly stronger than that of high-sulfur fuel oil, but the structural contradiction had not completely reversed, and there was no room for a significant increase in the high-low sulfur spread [2]. 3) Strategy Summary - **Cross-variety**: Short the FU crack spread (FU-Brent or FU-SC) on rallies [3] - **Cross-period**: Short the FU2509 - FU2510 spread on rallies [3] - **Futures-spot**: None [3] - **Options**: None [3] 4) Market Data Charts - Charts related to Singapore high-sulfur and low-sulfur fuel oil spot prices, swap near-month contracts, and near-month spreads, as well as domestic fuel oil FU and low-sulfur fuel oil LU futures contract closing prices, index closing prices, near-month contract prices, near-month spreads, and trading volume and open interest are provided [4]

1. Report Industry Investment Rating - High-sulfur fuel oil: Oscillatory [3] - Low-sulfur fuel oil: Oscillatory [3] 2. Core View of the Report - The prices of fuel oil futures contracts rose, with the main contract of SHFE fuel oil futures closing up 1.09% at 2,972 yuan/ton, and the main contract of INE low-sulfur fuel oil futures closing up 1.69% at 3,663 yuan/ton. After the OPEC meeting announced a production increase of 550,000 barrels per day in August, the crude oil price first fell and then rose, showing strong support for the cost of fuel oil in the short term [1]. - The high-sulfur fuel oil market has a relatively abundant supply in the spot market, and the cracking spread may need further adjustment. After the adjustment, it will receive new support [1]. - The short-term supply pressure of low-sulfur fuel oil is limited, and the current market structure is relatively strong. However, in the medium term, the market share will be gradually replaced, and there is a lack of continuous upward momentum [2]. - The current market driver of low-sulfur fuel oil is slightly stronger than that of high-sulfur fuel oil, but the structural contradiction has not been completely reversed, and the high-low sulfur spread does not have the space for a significant increase for the time being [2]. 3. Strategy Summary High-sulfur Fuel Oil - Market trend: Oscillatory [3] Low-sulfur Fuel Oil - Market trend: Oscillatory [3] Cross-variety Strategy - Short the FU cracking spread (FU-Brent or FU-SC) on rallies [3] Cross-period Strategy - Short the FU2509 - FU2510 spread on rallies [3] Spot-futures Strategy - None [3] Options Strategy - None [3]

Report Summary 1. Report Industry Investment Rating No specific industry investment rating is provided in the report. 2. Core Viewpoints - The market has returned to the fundamental - driven logic, and the volatility of the fuel oil market has decreased significantly. Both high - sulfur (FU) and low - sulfur (LU) fuel oil are in a narrow - range oscillation state [1]. - For high - sulfur fuel oil, the supply is relatively abundant, and the demand from power generation terminals may decline year - on - year due to OPEC's production increase. However, after the market structure adjustment, it will gain new support [2]. - For low - sulfur fuel oil, the short - term supply pressure is limited, but in the medium term, the market share will be gradually replaced by the carbon - neutral trend in the shipping industry. The market lacks a continuous upward - driving force [3]. - The current market driving force of low - sulfur fuel oil is stronger than that of high - sulfur fuel oil, and the structural contradiction still exists. The high - low sulfur price difference does not have the space for a significant increase for the time being [3]. 3. Summary by Related Content Market Analysis - The main contract of SHFE fuel oil futures closed down 1.01% at 2,987 yuan/ton, and the main contract of INE low - sulfur fuel oil futures closed down 0.47% at 3,619 yuan/ton [1]. - With the easing of the Middle - East situation, the oil premium caused by geopolitical conflicts has rapidly declined, driving down the energy sector. The market is now fundamentally driven, and the volatility has decreased [1]. High - Sulfur Fuel Oil Market - The spread structure of high - sulfur fuel oil has weakened recently, with spot discounts, monthly spreads, and crack spreads declining, indicating sufficient supply and lack of positive drivers [2]. - OPEC decided to increase production by 548,000 barrels per day in August, accelerating from 414,000 barrels per day from May to July. The demand for high - sulfur fuel oil in power generation terminals may decline year - on - year [2]. - The crack spread of high - sulfur fuel oil may need further adjustment to attract incremental demand. The increase in the consumption tax deduction ratio of some domestic refineries is beneficial to the recovery of high - sulfur fuel oil import demand [2]. Low - Sulfur Fuel Oil Market - In the short term, the supply pressure of low - sulfur fuel oil is limited, and the market structure is relatively strong. The supply of arbitrage cargoes from the Western region is low, and domestic production is at a low level. The significant increase in bunker sales in May in Singapore, Zhoushan, and Shanghai supports the market [3]. - In the medium term, the carbon - neutral trend in the shipping industry will gradually replace the market share of low - sulfur fuel oil. After the end of the domestic refinery maintenance season, domestic production is expected to increase [3]. Strategies - High - sulfur fuel oil: Oscillation [4]. - Low - sulfur fuel oil: Oscillation [4]. - Cross - variety: Short the FU crack spread (FU - Brent or FU - SC) on rallies [4]. - Cross - period: Short the FU2509 - FU2510 spread on rallies [4]. - Spot - futures: None [4]. - Options: None [4].

Report Summary 1. Report Industry Investment Rating - High-sulfur fuel oil: Oscillation [3] - Low-sulfur fuel oil: Oscillation [3] 2. Core Viewpoints - The high-low sulfur spread continues to rebound, but the driving force on the low-sulfur end remains limited. The market has returned to the fundamental-driven logic. The differentiation pattern between high and low sulfur has significantly converged [1]. - The high-sulfur fuel oil fundamentals are in a stage of marginal weakening, with the spot premium, monthly spread, and crack spread continuously declining. However, summer power generation demand is strong, shipping consumption is relatively stable, and the increase in the consumption tax deduction ratio of some domestic refineries is beneficial for the recovery of import demand [1]. - The short-term supply pressure of low-sulfur fuel oil is limited, and the market structure is stable. But in the medium term, the demand share of low-sulfur fuel oil will be gradually replaced, and domestic production is expected to increase marginally [2]. 3. Summary by Related Content Market Analysis - The main contract of Shanghai Futures Exchange fuel oil futures closed down 0.44% at 2,960 yuan/ton, while the main contract of INE low-sulfur fuel oil futures closed up 0.56% at 3,596 yuan/ton [1]. - With the easing of the Middle East situation, the crude oil premium has rapidly declined, and the market has returned to fundamental-driven logic [1]. - The high-sulfur fuel oil's spread structure is in a stage of marginal weakening, with sufficient supply on the spot side and limited positive drivers. OPEC's production increase will drive up the supply of medium and high-sulfur crude oil and fuel oil. After the ceasefire with Israel, Iran's exports show signs of recovery [1]. - The short-term supply pressure of low-sulfur fuel oil is limited, with insufficient supply of Western arbitrage cargoes and low domestic production in May. But in the medium term, the demand share will be gradually replaced, and domestic production is expected to increase marginally after the end of the refinery maintenance season [2]. Strategy - High-sulfur: Oscillation [3] - Low-sulfur: Oscillation [3] - Cross-variety: Short the FU crack spread (FU-Brent or FU-SC) on rallies [3] - Cross-period: Short the FU2509-FU2510 spread on rallies [3] - Spot-futures: None [3] - Options: None [3]