Fuel oil futures traded on the Shanghai Futures Exchange, or SHFE, rose 1.07 percent to a record high, driven largely by the continuing surge in crude oil prices over the past few weeks.
The price of the most actively traded fuel oil futures contracts for delivery in January 2008 jumped 40 yuan per ton to close at 3,795 yuan yesterday.
The price of the most actively traded crude oil futures contract on the New York Mercantile Exchange, NYMEX, surged 1.14 percent to a record high of $87.55 a barrel in electronic trading in New York.
It is widely expected by analysts that crude oil futures will continue the upward trend, as tensions on the Turkey-Iraq border is intensifying, raising concerns that supplies could be interrupted as global inventories decline.
Analysts said fuel oil futures in the domestic market would continue the upward trend in tandem with crude prices.
"The domestic spot and futures markets in fuel oil are closely in sync with the international market trend," said Lin Hui, an analyst at a futures company of Orient Securities. "The fuel oil futures in China is expected to continue the upward spiral in the upcoming weeks, as the price increase in the global market would not change in the next several weeks," she added.
Together with gas oil, diesel, and kerosene, fuel oil is one of the four major products processed from crude oil. Currently, China's imported fuel oil amounts to 50 percent of its total demand. Among the total fuel oil imported, 80 percent comes from refineries in South Korea, Singapore, and Russia.
EIA, the US Energy Information Administration, reported last week the nation's crude oil stockpile had dropped 9.8 percent, or 14 million barrels from a year earlier period.
According to a report released by the Organization of Petroleum Exporting Countries, OPEC, this Monday, the world demand in crude oil is expected to increase 1.5 percent, or 1.3 million barrels per day. Meanwhile, the member countries of the Organization for Economic Cooperation and Development, OECD, reported recently the aggregate stockpile of crude oil had dropped to a five-year average low last month.
(China Daily October 17, 2007)
