Galaxy Futures: Fuel Oil Remains Strong Amid Geopolitical Conflicts

Middle East conflict conditions are volatile, and the risk of oil price fluctuations has increased. In the Baltic Sea, Russia’s main ports have recently been attacked or affected, impacting the loading and export of nearby oil products. The incremental impact Russia previously had that was stored due to exemptions has been partially offset. Singapore’s fuel oil inventories remain at a high level, with a third consecutive week of build. During Russia’s exemption window, the volume of fuel oil arrivals from Russia increases. Mexico’s exports also rise month-over-month, but the incremental increase is limited, while Middle East exports remain stalled. As the second quarter approaches, watch for the start of import demand for power generation backup and stockpiling in South Asia—Bangladesh and Pakistan—along with the Saudi Arabia and Egypt regions. Amid repeated geopolitical disruptions, bunker demand at the port of Fujairah may shift to the Singapore region, and bunker demand in Singapore may be expected to grow. Nearby low-sulfur supply is tight; in China, some domestic major refineries have reduced operating rates and scaled back low-sulfur production. In foreign markets, Al-Zour refinery has started to cut operating rates nearby and is expected to enter maintenance in April; the Dangote refinery’s gasoline unit returns, and low-sulfur exports and external supply decrease. (Galaxy Futures)