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Investment report: the Shanghai fuel oil rally is unfolding


last week, international crude oil continued to rise, while the rebound in the US dollar and the sharp increase in inventories did not prevent its rise. The rise in crude oil will increasingly cause global concerns

although the crude oil inventory increased significantly last week, it failed to suppress the crude oil price. The main reason is that the current inventory situation in the United States has increased, and the market is worried about supply. Crude oil inventories may be close to the peak of seasonal rise, and there is little room for rise. At present, the crude oil inventory is close to the nine-year average level in the same period, which is at the lower middle level, and the inventory is not sufficient. Gasoline inventory is higher than that of the previous two years, 9.5% higher than that of the same period last year. However, the recent continuous decline of gasoline inventory in the United States may increase the market's concern about the supply in the peak demand season in summer

the 17 year historical statistical results of NYMEX crude oil show that the probability of international crude oil rising in May is 58.82%, which is relatively high. The second quarter is generally in the process of adjustment, and the decline will not be too large, and pave the way for the rise in the peak demand season in the third quarter

combined with fundamental and technical analysis, the rising trend of international crude oil is still obvious. If the global economy does not deteriorate significantly, the long-term bullish view remains unchanged. However, non-commercial investors are increasingly cautious about long positions in high-level areas, and the high oil price does not rule out the possibility of adjustment

recently, fuel oil prices in Singapore have shown a breakthrough upward trend, while the spot price of Huangpu fuel oil has stabilized at a high level. It is estimated that Huangpu spot will have a lag time to keep up with Singapore spot. The import duty paid price has climbed above 5000 yuan/ton, exceeding the upper limit of Rb (2) turnover frame of yuan/ton, which is the price level of mixed high sulfur fuel oil acceptable to the power plant. It is estimated that import demand will be hit, while domestic demand for fuel oil substitution will increase

on the whole, the risk of China's economic downturn is small, and the demand in the peak consumption season will not shrink significantly. Moreover, from the perspective of the internal and external price comparison of fuel oil, and the price comparison between fuel oil and crude oil, the price of fuel oil futures in Shanghai is low. Therefore, there is little room for Shanghai fuel oil to fall. The middle line continues to be bullish, and the recent replenishment market is under way. Bulls can continue to hold, and pay attention to the high position and take profits in time

fuel oil futures in Shanghai were pulled higher last week. The main fuel oil contract fu0807 in Shanghai closed at 4659 yuan/ton, up 184 points or 4.11% from the previous week. Whampoa spot price has become less driven by positive support such as the sharp increase in the electricity price of fuel oil power generation, while Singapore's fuel oil has hit another record high, and the internal and external price gap has widened again

NYMEX crude oil rose significantly last week. Over the weekend, the settlement price of NYMEX crude oil futures in recent months was close to $125.96 per barrel, higher than the record high of $102.53 after inflation adjustment set in 1980, and the high point of last week expanded to $126.26. It was mainly driven by the U.S. economic recession, the sharp depreciation of the dollar caused by the reduction of interest rates, the sharp decline in gasoline inventories, and some unexpected blows to the supply chain, which pushed up oil prices

this paper attempts to analyze the causes and future changes of the recent trend of crude oil and Shanghai fuel oil futures

first, the main factors affecting international crude oil

1. Macroeconomic environment: the contradiction between inflation and inflation control is particularly prominent

recently, the US dollar index is still in the rebound trend, because the market expects that there is little room for the fed to cut interest rates. The monthly rate of new home sales in the United States fell by 8.5% in March and 5.3% in February. The sluggish real estate industry makes people still have expectations about the U.S. economic recession and the Fed's continued interest rate cut. Under this situation, the rebound momentum of the dollar should also weaken. However, in April, the financial market has shown signs of stabilization, and the United States is facing continuous inflationary pressure. The market expects that there is little room for the fed to cut interest rates. The Federal Reserve has decided to cut interest rates by 25 basis points to a low of 2% at its meeting on April 30. The monetary policy adopted by the Federal Reserve helps stimulate economic growth, but is not conducive to the current high inflation. Downside risks to the US economy remain. High oil prices may further impact the U.S. economy, partially offsetting efforts to stimulate the economy

rising oil prices have increased inflationary pressure, and the Central Bank of China has adopted a tight monetary policy to regulate the economy. It has decided to raise the deposit reserve ratio by 0.5 percentage points to 16% since, which is the 13th consecutive increase in deposit reserves since 2007. According to the statistics released by China in April, the consumer price index (CPI) and the producer price index (PPI) of industrial products are at a ten-year high, and the upstream and downstream prices are generally rising. Therefore, curbing inflation and preventing the structural rise of commodities from turning into a comprehensive vicious rise have been placed in a prominent position in the government's macro-control

the key point of China's macro-control is to alleviate the contradiction between the current rapid growth of foreign trade surplus and excess market liquidity, prevent the economy from overheating, and prevent the emergence of hyperinflation, so as to ensure that China's economy can grow steadily and rapidly

2. World crude oil supply and demand: China's demand is still strong

the International Energy Agency (IEA) said in its march energy market report that the growth rate of global oil demand in 2008 is expected to be far less than expected, dragged down by the slowdown in economic growth. IEA lowered its forecast of 460000 barrels per day of oil demand growth, the largest downward revision in seven years. At present, it is estimated that the global daily oil demand will increase by 1.3 million barrels to 87.2 million barrels

iea's advance threshold is also relatively underestimated. China's daily oil demand in 2008 was 7.9 million barrels, a decrease of 70000 barrels compared with its previous expectations. The IEA said that during the Olympic Games, the demand for fuel in China's transportation industry will increase sharply, as tourists, spectators and athletes will rush into China by plane, and will travel to various venues and places

China's official statistics show that China's crude oil imports have increased significantly, and the processing demand is still strong. China's crude oil output in June this year was 46.85 million tons, an increase of 2.2% year-on-year. Imported crude oil was 45.53 million tons, an increase of 14.9% year-on-year. Crude oil processing capacity was 84.59 million tons, an increase of 7.6% year-on-year

the organization of Petroleum Exporting Countries (OPEC) decided to maintain the output level at its meeting on March 5. Because the organization believes that the high oil price is not driven by insufficient supply, but due to the continued depreciation of the US dollar and the impact of the US economic recession. OPEC may continue to resist the calls of American and European leaders for OPEC to increase production to stabilize oil prices

Figure 1: annual average daily demand of global crude oil

trend chart of annual average daily demand of global crude oil. (data source: IEA)

3. Geopolitical pattern: oil facilities are constantly under attack

affected by oil workers' strikes and armed attacks, ExxonMobil's oil production in Nigeria has been interrupted, with a daily production capacity of 800000 barrels. A strike by workers at a major British refinery on April 27 forced BP to close a main oil pipeline in the North Sea oil field. It is reported that the oil delivery system transports about 700000 barrels of oil produced by 70 oil fields in the North sea every day, accounting for one-third to one-half of Britain's daily oil production

the Basra oil pipeline in the southern city of Iraq was destroyed by explosion, which once pushed up the survival pressure of international coal enterprises and increased crude oil. The oil dispute between Venezuela and the United States did not cause waves. Because Iran refused to stop uranium enrichment activities, and refused to answer the questions raised by the International Atomic Energy Agency on its nuclear program, the United Nations Security Council passed a resolution imposing the third round of economic sanctions on Iran by nearly unanimous vote on March 3

Iran's hard line position on the nuclear issue and the resumption of disputes between Palestine and Israel in the Middle East are still the core of geopolitical conflicts. The Iranian nuclear crisis was an important factor in the rise of crude oil in the first half of 2006. With Iran's announcement that it has successfully enriched uranium with a purity of 3.5%, the contradiction between Iran and the West on the nuclear issue has become increasingly prominent. The pending Iranian nuclear issue is still potentially beneficial. In the face of increasingly severe economic sanctions from the international community, it depends on whether Iran can stick to it

200 Guoliang he Guoliang, chairman of Guoliang copper, has been with copper for more than 20 years; Companion rdquo; In his career, the eight-year U.S. election is coming, and the energy issue has become a new "weapon" available to U.S. presidential candidates in the election campaign. The US government has the ability and motivation to regulate the crude oil market. Because the high oil price slows down the economic growth of the United States, Russia benefits from the high oil price, threatens the national strategy of the United States, and the high oil price is detrimental to the settlement of the Iranian nuclear issue

4. Seasonal factors: the operating rate of refineries will begin to rise

last week's figures showed that the capacity utilization rate of refineries in the United States was 85%, down 0.4 percentage points from the previous week. From the historical data, the productivity of refineries is still at a seasonal low point, which is lower than the same period in the previous two years. On the one hand, the United States refinery entered the maintenance period, and the production load decreased. On the other hand, it means that the output of refined oil decreased, and the refining profit margin is not high

the United States will enter the peak season of gasoline consumption in summer in June. The market becomes sensitive to gasoline inventory data

5. Crude oil inventory: the current inventory situation has increased, and the market is worried about supply.

as of May 2, 2008, crude oil inventory was 325.6 million barrels, an increase of 5.7 million barrels over last week. Gasoline inventory was 211.9 million barrels, an increase of 800000 barrels over last week, and fell for six consecutive weeks after reaching the highest level since 1993. Distillate oil inventory reached 105.7 million barrels, down 100000 barrels from last week

Figure 2: weekly inventory of U.S. crude oil and gasoline

weekly inventory trend of U.S. crude oil and gasoline. (data source: EIA)

although crude oil inventories increased significantly, it did not suppress crude oil prices. The reason is estimated to be that crude oil inventories are lower than the same period of the previous three years, 5.5% lower than the same period last year. At present, the operation rate of refinery units is not high, and the crude oil processing volume decreases, which is conducive to the rise of crude oil inventory. However, crude oil inventory may be close to the seasonal high point, and there is little room for rise. From the figure below, this year's crude oil inventory has entered the seasonal rise stage earlier than in previous years, and the crude oil inventory is close to the nine-year average level. The inventory is at the lower middle level, and the inventory is not abundant. The gasoline inventory is higher than that of the previous two years, 9.5% higher than that of the same period last year. However, the recent continuous decline of gasoline inventory in the United States may increase the market's concern about the supply in the peak demand season in summer

Figure 3: U.S. crude oil inventory change cycle

U.S. crude oil inventory change cycle trend chart. (data source: EIA)

6. Position structure: non-commercial net long positions stopped falling and rebounded

Figure 4: U.S. crude oil position structure

U.S. crude oil position structure chart. (data source: CFTC)

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