Singapore fuel oil inventory marginal accumulation can be properly laid out multi-FU empty LU strategy

The European Parliament voted on June 8 to pass a proposal to stop selling new fuel vehicles, including hybrid ones, in the EU from 2035
.
The final translation of the proposal into law is subject to unanimous approval
by EU member states.
Recently, the EU has accelerated the transformation process
in the energy sector.
The "judgment" on internal combustion engines is one of the key elements of the EU emission reduction package "Fit For 55", which aims to achieve carbon neutrality by 2050
.

Saudi Arabia's fuel oil exports in May were 1.
04 million tonnes, up 5.
1%
month-on-month, according to Kpler data.
Iraq's exports climbed to 900,000 tonnes in May, up 34.
5%
month-on-month.
Singapore high-sulfur fuel oil supply side began to marginally loose, while the Singapore region fuel oil inventory marginal accumulation, the production of low-sulfur fuel oil raw materials are mainly sulfur-reducing raw materials and high-sulfur fuel oil, due to the shortage of sulfur-reducing raw materials, resulting in the production of low-sulfur fuel oil raw materials high-sulfur fuel oil demand decreased, the spot market in Singapore from the previous spot water situation to the discount, all show that high-sulfur fuel oil supply and demand began to loosen marginally
.

Daniel Yegin, Global Vice Chairman of S&P: Oil demand remains strong and supply is weak
.
The oil supply situation is "extremely tight"
.
The importance of OPEC+ will wane
after August.
If Biden visits (Saudi Arabia), Saudi Arabia may increase oil supply
.

Institutional perspectives

South China Futures:

At present, in addition to the promotion of crude oil, the price difference between high and low sulfur mainly comes from the disturbance
on the supply side.
Low sulfur because of foreign refined oil cracking has been maintained at a high level, but the discount part of low sulfur has been compensated, if gasoline and diesel cracking can not be further pushed up, the low sulfur market push is limited, and due to the high valuation of domestic LU, there is still a large risk of
decline in the short term.
For high sulphur, due to the high sulfur pollution incident of Glencore ships, the willingness of ship owners to inject high sulfur in the Singapore market has decreased, and there are signs of bottoming out, and the high and low sulfur spreads are still maintained at historical highs, and the multi-FU empty LU strategy
can be appropriately laid out.

Huatai Futures:

Recently, Singapore's low-sulfur fuel oil spot premium has fallen back continuously, and has now dropped to 60.
53 US dollars / ton, although it is still in the absolute high range, but the recent downward trend may reflect the extreme tension of the market has eased
.
We believe that the overall supply of refined products is expected to rebound
marginally in the context of high profits driving higher loads from overseas refineries.
Although gasoline and diesel will divert some components of low-sulfur fuel oil, considering that the terminal demand of low-sulfur fuel oil itself is general, if the supply-side increment can be released smoothly, then the market structure of low-sulfur oil may be marginally weakened and needs continuous attention
.

Strategy: Neutral too much; Dip long LU or FU main contract
.