Report Industry Investment Rating - Not provided Core Viewpoints - The high - sulfur fuel oil market structure has shown signs of stabilization, with reduced supply pressure and marginal improvement in refinery demand. However, there is still resistance above the valuation due to potential seasonal consumption decline. The low - sulfur fuel oil market has limited supply pressure, and there are long - term substitution risks, but the downside space is also limited [5]. - For high - sulfur fuel oil, the short - term outlook is neutral, and the medium - term outlook is downward. For low - sulfur fuel oil, the short - term outlook is neutral, and the medium - term outlook is downward. It is recommended to go long on the FU2511 - 2512 spread at low prices (positive spread trading) [6]. Summary by Related Catalogs Market Analysis - With the escalation of the geopolitical situation, crude oil prices rebounded this week, boosting the downstream energy sector. The fundamentals of high - sulfur fuel oil improved marginally, and the cancellation of some FU futures warehouse receipts strengthened the futures market structure. The weekly increase of the FU main contract was 4.36%, and that of the LU main contract was 1.9% [1]. Supply - **High - sulfur fuel oil**: In September, the expected shipments of high - sulfur fuel oil from Iran are 1280,000 tons, a month - on - month decrease of 50,000 tons and a year - on - year decrease of 460,000 tons; from Russia, 2.89 million tons, a month - on - month increase of 330,000 tons and a year - on - year decrease of 70,000 tons; from the Middle East, 2.5 million tons, a month - on - month decrease of 1.26 million tons and a year - on - year decrease of 1.12 million tons [2]. - **Low - sulfur fuel oil**: In September, the expected shipments of low - sulfur fuel oil from Nigeria are 530,000 tons, a month - on - month increase of 220,000 tons and a year - on - year increase of 530,000 tons; from Kuwait, 240,000 tons, a month - on - month decrease of 130,000 tons and a year - on - year decrease of 150,000 tons. Brazilian exports decreased significantly in September. In August, the domestic production of low - sulfur fuel oil for bonded use in Chinese refineries was 1.065 million tons, a month - on - month increase of 46,000 tons or 4.51%. Overall, the supply pressure of low - sulfur fuel oil is still limited [2]. Demand - Although the impact of US tariffs on shipping demand has not been fully reflected, there is still downward pressure on trade and shipping demand in the medium term. High - sulfur fuel oil demand in the marine fuel sector is more resilient, but the summer power generation demand has not exceeded the seasonal level. The demand for low - sulfur fuel oil in the marine fuel sector is average, and its market share is being gradually replaced [3]. Inventory - This week, the fuel oil inventory in Singapore was 22.804 million barrels, a week - on - week decrease of 10.26%; the fuel oil inventory in Zhoushan Port was 1.19 million tons, a week - on - week increase of 10.19% [4]. Strategy - **High - sulfur fuel oil**: Short - term neutral, medium - term downward. - **Low - sulfur fuel oil**: Short - term neutral, medium - term downward. - **Cross - variety**: None. - **Cross - period**: Go long on the FU2511 - 2512 spread at low prices (positive spread trading). - **Spot - futures**: None. - **Options**: None [6]

Report Industry Investment Ratings - Crude oil: ★☆☆, indicating a slightly bullish/bearish trend with limited trading operability [1] - Fuel oil: ★☆☆, suggesting a slightly bullish/bearish trend with limited trading operability [1] - Low-sulfur fuel oil: ★☆☆, showing a slightly bullish/bearish trend with limited trading operability [1] - Asphalt: ☆☆☆, meaning the short-term bullish/bearish trend is in a relatively balanced state, and it's advisable to wait and see [1] - Liquefied petroleum gas: ☆☆☆, indicating the short-term bullish/bearish trend is in a relatively balanced state, and it's advisable to wait and see [1] Core Viewpoints - Crude oil may fluctuate weakly in the short term, influenced by macro and supply-demand factors, with attention on the progress of US-Iran nuclear talks and the recurrence risk of the Middle East situation [1] - Fuel oil and low-sulfur fuel oil futures are running weakly, with different trends in their cracking spreads [2] - Asphalt has shown strong performance recently, with potential increases in supply and demand [3] - LPG's fundamentals are generally loose, and the market is oscillating after the geopolitical impact fades [4] Summary by Related Catalogs Crude Oil - Overnight international oil prices declined slightly, with the SC08 contract dropping 1.12% during the day [1] - Last week, US EIA crude oil inventories decreased by 5.836 million barrels more than expected, but the four-week average of refined oil apparent demand was still 1.6% lower than the same period last year [1] - In the third-quarter peak season, the global oil inventory accumulation may narrow, but the loose situation is difficult to fundamentally change under the OPEC+ production increase pressure [1] Fuel Oil & Low-Sulfur Fuel Oil - The decline of SC has led to the weak operation of fuel oil futures [2] - As the geopolitical premium of high-sulfur fuel oil fades, FU is weaker than LU [2] - The demand for ship bunkering and deep processing is sluggish, and the demand boost for high-sulfur fuel oil in the Middle East and North Africa in summer is discounted due to the high cracking valuation [2] - The cracking spread of low-sulfur fuel oil has rebounded from a low level [2] Asphalt - BU remained strong today despite SC leading the decline [3] - In July, refineries plan to produce 2.47 million tons of asphalt, with some refinery overhauls postponed and others resuming production [3] - The supply of asphalt may be compressed due to the expected increase in the operating rate of Sinopec's deep processing units [3] - The cumulative year-on-year increase in the shipment volume of 54 sample refineries is considerable, and the terminal demand is expected to be substantially boosted soon [3] LPG - After the geopolitical situation eases, the Middle East market has declined significantly [4] - The domestic chemical demand has rebounded, and the cost advantage of PG in the chemical industry has increased [4] - The supply pressure may decrease, and the market is oscillating after the geopolitical impact fades [4]

Report Information - Report Title: Fuel Oil Industry Weekly Report [2] - Report Date: June 2, 2025 [2] - Author: Xu Liang (Z0002220) [3] - Reviewer: Tang Yun (Z0002422) [3] Industry Investment Rating - Not provided in the report Core Viewpoint - Crude oil production increase expectations and macro bearish factors weaken cost support. Coupled with weak demand in the off - season and high inventory pressure, fuel oil maintains a pattern where it is easier to fall than to rise [5] Summary by Content Fundamental Information - Fujeirah fuel oil inventory decreased by 1.395 million barrels (a 12.7% decline) weekly, and the start of power generation demand in the Middle East alleviates regional supply pressure [4] - Middle - Eastern countries such as Egypt and Saudi Arabia have increased high - sulfur fuel oil power generation tenders, supporting the fundamentals of the high - sulfur market [4] - Singapore fuel oil inventory increased by 0.832 million barrels to 22.338 million barrels (a new high this year), and the inflow of European cargoes intensifies supply looseness [4] - During the off - season of marine fuel consumption and with the expectation of refinery restart, the spot price dropped by 85 yuan/ton weekly; OPEC+ production increase expectations suppress crude oil costs [4] Low - Sulfur Fuel Oil Price and Spread Data - **Price Changes**: Singapore low - sulfur fuel oil M + 2 was at $472.35/ton on June 2, 2025, with a daily increase of $6.73 and a weekly decrease of $0.98. Other regions also had corresponding price changes [6] - **Spread Changes**: LU futures M + 3 - Singapore low - sulfur fuel oil M + 2 was at $6.4711/ton on June 2, 2025, with a daily decrease of $19.6327 and a weekly decrease of $6.7902. Other spreads also had different changes [6] High - Sulfur Fuel Oil Price and Spread Data - **Price Changes**: Singapore high - sulfur fuel oil M + 1 was at $407.54/ton on June 2, 2025, with a daily decrease of $3.84 and a weekly decrease of $12.86. Other regions also had price fluctuations [28] - **Spread Changes**: Singapore high - sulfur fuel oil monthly spread was at 7.45 on June 2, 2025, with a daily decrease of 7.23 and a weekly decrease of 10.42. Other spreads also changed accordingly [28] Supply and Demand - Related Data - **Supply**: Data on low - sulfur fuel oil exports from Kuwait, Brazil, and Russia, as well as China's bonded port fuel oil monthly supply are presented [15][17][21] - **Demand**: Data on China's low - sulfur fuel oil port actual consumption, Singapore's marine fuel bunkering volume, and high - sulfur fuel oil sales in Singapore and Fujairah are provided [22][29][40] Inventory - Related Data - Inventory data for Singapore's residue, ARA fuel oil, Fujeirah fuel oil, and fuel oil in Zhoushan Port's bonded warehouse are shown [24][25] - Seasonal data on high - sulfur floating storage inventories in Malaysia and Singapore are also presented [48][49] Other Data - Seasonal data on low - sulfur fuel oil cracking spreads, monthly spreads, and price differences between different regions are provided [7][9][12] - Seasonal data on high - sulfur fuel oil cracking spreads, monthly spreads, and price differences between different regions are also included [32][34][37]