Back to oil trading! Looks like we will be range bound with confecting fears of an uncertain Europe and uncertainty surrounding Iranian oil production. That has kept the product markets strong this week. Refinery shutdowns and the possibility of an Iranian oil embargo is increasing worries that products supplies may continue to tighten. Dow Jones News reports that Asian oil product market sentiment will likely get a boost from the upcoming regional refinery maintenance season, with the fuel oil market deriving particular strength from rising Chinese imports. Disruption of Dar Blend supplies from South Sudan is tightening the regional market, as it is a common blendstock for fuel oil traders and Chinese teapot refiners.
Reduced supply from the African country cuts into the "overall fuel oil pool" and "is probably the reason" for the prolonged strength of fuel oil in the region, said a Singapore-based fuel oil trader. In addition, Chinese imports of fuel oil are expected to rise as the country's refiners cut purchases of Iranian crude and replace some of it with West African crude, which yields less fuel oil per barrel, several traders said. "As long as Iranian and Sudanese crudes are not finding their way to China, fuel oil will stay strong," said a fuel oil trader with a Chinese firm. The shortage of feedstock in China comes ahead of the start of a regional refinery maintenance period that could further crimp overall supply in Asia."
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at firstname.lastname@example.org.