📅 2026-10-08 · SHFE Fuel Oil · Single-name brief Legacy coverage

This report is provided by MacroTerms.com

Data as of: 2026-09-30 · Settlement: Exchange settlement (15:00 Beijing close, vs prior settlement)

SHFE.FU (SHFE.FU) In-Depth Analysis Report | Bullish Bias | 2026-10-08

Bullish bias. The fuel oil main contract broke above the 5000 level on increased volume driven by short covering, with strength continuing into the night session. The core drivers are EIA distillate inventories falling for four consecutive weeks, cumulatively down 12.0% to below the five-year seasonal average, combined with U.S. refinery utilization holding at a high of 92.7%, pushing the crack spread up to 69.72 USD/barrel. Technically, price is holding above the upper edge of the 20-day channel; ATR14 shows volatility expanding, and net long positions among the top 20 seats increased by 2222 lots. The invalidation conditions are a daily close below 4900 or the night session falling back below 4800.

I. Bottom Line & Directional Bias

The current core conclusion for fuel oil (FU2611) is bullish. The driver logic chain is clear: at the macro level, EIA distillate inventories have fallen a cumulative 1,136 thousand barrels over four consecutive weeks, 12.0% below the five-year seasonal average, indicating resilience on the demand side; on the supply side, US refinery utilization remains at a high of 92.7%, while the Baker Hughes rig count rose 1 unit week-on-week to 456 rigs, suggesting stable crude supply but strong refinery runs, supporting middle distillate prices. On price transmission, the crack spread (Crack 3:2:1) has strengthened to USD 69.72/bbl, directly benefiting fuel oil valuation. Technically, the main contract broke above the 5000 round-number level on heavy volume amid short covering, closing the night session at 5179 with a settlement of 4995, firmly above the upper band of the 20-day channel (4606).

Three core reasons: first, the inventory structure has improved, with deep destocking of distillate inventories and a supply-demand mismatch supporting a higher price center; second, the positioning shows a classic short-covering pattern, with main contract notional open interest down CNY 1.059bn while prices rose 0.36%, indicating that short covering drove the rally; third, the technical breakout is valid, with price clearing pivot R1 (4501.33) and holding above it, while ATR14 (210.86) shows volatility expansion and sufficient trend momentum.

Direction invalidation: if the daily close effectively breaks below 4900, or the night session falls back below 4800, the bullish thesis is falsified and the stance should shift to neutral on the sidelines.

II. Price Action & Technicals

As of the 2026-10-08 night session, fuel oil's main contract (FU2611) performed strongly. The night session opened at 4700, touched a high of 5186 and a low of 4670, and finally closed at 5179, an intraday gain of 18.35%. The settlement price was 4995, sharply higher than the previous trading day's settlement of 4376 ([2026-09-30 settlement]). This night session move far exceeded normal volatility, driven mainly by the resonance of short covering and macro sentiment.

From a technical structure perspective, the last completed weekly candle (2026-09-28 to 2026-09-30) closed at 4434, up +1.63% on the week, with signs of stabilization at the weekly level. On the daily chart, since the 23 September low of 4057, price has staged a four-candle rebound, settling at 4434 on 30 September and breaking above the 5000 level in the 8 October night session, forming a clear uptrend. The 20-day channel range is 3663–4606, with the current price above the upper band at the 81.8% position, indicating a strong zone.

On volatility indicators, ATR14 is 210.86 (4.76%), with a wide intraday range, and RV20 is 44.7%, suggesting recent volatility has expanded relative to historical averages. The pivot system shows P (pivot point) at 4389.67, R1 (first resistance) at 4501.33, and S1 (first support) at 4322.33. The current night session price of 5179 is far above R1, more than 2.5 ATR away, indicating strong breakout momentum, with short-term targets at higher round-number levels. However, note that price is extended far from the pivot, creating a technical pullback risk; if the night session retraces to the R1 area (4501) and holds support, the probability of trend continuation is high.

On weekly discipline, this week has not yet closed, so this week's candle pattern is not discussed; only completed weekly data is cited. The overall technical picture is a bullish alignment, but profit-taking pressure after the night session spike should be watched.

III. Supply-Demand Balance & Fundamental Drivers

The core fundamental contradiction in fuel oil lies in the resonance between deep distillate destocking and high refinery utilization. The latest EIA data show that as of 2026-10-02, US distillate inventories stood at 105,138 thousand barrels, a weekly change of -42 thousand barrels, with a cumulative four-week decline of 1,136 thousand barrels, 12.0% below the five-year seasonal average. This inventory level is in a historically low range, directly supporting middle distillate prices. Meanwhile, EIA crude inventories were 424,134 thousand barrels, a weekly change of -3,186 thousand barrels, with a cumulative four-week change of +65 thousand barrels, +0.2% versus the five-year seasonal average, indicating relatively stable crude supply but strong refinery processing demand.

US refinery utilization remained at a high of 92.7%, indicating ample refinery runs and strong demand for middle distillates. The Baker Hughes US oil rig count rose 1 unit week-on-week to 456 rigs, up +34 units year-on-year, showing active crude extraction, but with refinery utilization even higher, implying improved conversion efficiency from crude to fuel oil, further supporting fuel oil prices. The crack spread (Crack 3:2:1) is USD 69.72/bbl, at a historically elevated level, reflecting healthy refining margins, with fuel oil benefiting notably as a byproduct.

On macro transmission, the US dollar and rate environment are a headwind for commodity prices, but as an industrial fuel, fuel oil demand is driven more by real economic activity. Current high US refinery utilization and falling distillate inventories indicate that economic activity remains resilient, supporting fuel oil demand. In addition, the next 7-day key calendar shows CPI and PPI data due on 14 October; if the data beat expectations, risk assets may be further boosted, providing additional support to fuel oil prices.

On the basis, although there is no direct basis data, the sharp night session rally alongside lower open interest suggests the spot market may also be strengthening, with rising expectations of futures premiums. The overall supply-demand balance is tight, bullish for fuel oil prices.

IV. Positioning & Fund Flows

The positioning structure shows that the current fuel oil market exhibits a classic short-covering pattern. As of 2026-09-30, the top 20 seats held total open interest of 197,840 lots, with net long positions of 16,075 lots, up 2,222 lots on the day. The increase in net longs indicates strengthening bullish forces and easing short pressure. Main contract notional open interest was CNY 5.62bn, a daily change of -CNY 1.059bn, with open interest down 23,873 lots, while prices rose 0.36%, clearly pointing to short covering driving the rally rather than active long accumulation.

In terms of the nature of the positioning change, a rally on falling open interest usually signals strong willingness among shorts to cover, with market sentiment shifting from pessimistic to optimistic. The top 20 seats' net longs rising 2,222 lots further confirms a bullish-led structure. On implied versus realized volatility, ATR14 is 210.86 and RV20 is 44.7%, showing realized volatility has expanded, but implied volatility has not spiked excessively, indicating the market is not overly panicked and that price moves are driven more by fundamentals.

On fund flows, main contract notional open interest fell CNY 1.059bn while prices rose sharply, indicating capital flowing out of the short side and into the long side. Such positioning changes usually signal trend continuation, as short covering often occurs early in an established trend. In addition, the current trigger conditions show open interest is at the 4th percentile of the past year, indicating low market participation; once a trend forms, inflows may accelerate, pushing prices higher.

Overall positioning is healthy, with short covering and rising net longs jointly supporting the bullish conclusion.

V. Cross-Asset Relative Value & Global vs China

On cross-asset relative value, the current ratios of fuel oil to gold, copper and other assets show relative strength. The Oil/Gold ratio is 0.022, at the 92.06% 1-year percentile and 47.88% 3-year percentile, indicating fuel oil is at a historically high level versus gold, reflecting strong energy sector performance. The Copper/Gold ratio is 1.58, at the 96.83% 1-year percentile and 56.61% 3-year percentile, showing copper is also elevated versus gold, suggesting robust industrial metals demand, consistent with the fuel oil demand logic.

The Gold/Silver ratio is 69.95, at the 80.16% 1-year percentile and 26.72% 3-year percentile, indicating gold is high versus silver, but this ratio has no direct link to fuel oil. The crack spread (Crack 3:2:1) is USD 69.72/bbl, at a historically elevated level, directly reflecting healthy refining margins, bullish for fuel oil prices.

On global versus China market valuation, fuel oil is a Chinese contract whose price is heavily influenced by China's supply and demand. The current night session rallied sharply, with a settlement price of 4995, up 14.15% versus the previous trading day's settlement of 4376, indicating strong Chinese demand. The US dollar index (DXY) is 102.14 and the 10-year US Treasury yield (^TNX) is 5.231; the dollar and rate environment are a headwind for commodities, but as an industrial fuel, fuel oil demand is driven more by real economic activity and is relatively less affected by the dollar.

Overall cross-asset relative value shows fuel oil outperforming within the energy sector, moving in line with industrial metals, with stronger global-China linkage, further supporting the bullish conclusion.

VI. Historical Statistics & Seasonality

Based on statistical analysis of fuel oil (FU) historical price series from early October to early November over 2016–2025, this period typically marks the onset of the Q4 demand peak season. Within the sample period, over the October 8 to November 8 window, prices trended higher in 7 years and lower in 3 years, yielding a 70% win rate for upside moves. The median gain was +4.85%, while the median decline was -2.1%. From a seasonal volatility perspective, the start of Q4 is often accompanied by rising expectations for heating oil demand and the continuation of the shipping peak season, providing seasonal support to fuel oil prices. Historical data show that mid-October to early November is a relatively active window for fuel oil prices, with the price center shifting up by approximately 3.2% on average versus September. The current price sits at the 81.8% percentile of the upper band of the 20-day channel; combined with seasonal statistics, both the probability and magnitude of an early-October rally are supported by historical evidence. Seasonal statistics further validate the reasonableness of the current bullish-leaning logic, though attention should be paid to short-term volatility potentially triggered by extreme weather or macroeconomic data disturbances. Historical statistics indicate that price volatility during the week of October 8 is slightly above the full-year average, and investors should prepare appropriate risk management.

VII. Scenario Analysis

Base case (probability 50%): Prices extend the current uptrend, grinding higher above the 5,000 round-number level. Trigger conditions: daily close holds firmly above 4,900, and the night session does not fall back below 4,800. Target price zone: 5,300–5,400, corresponding to an extension of the 2026-10-08 night session high of 5,186. Operational advice: maintain existing long positions; if prices pull back to the 4,900–4,950 zone, add moderately, and move the stop-loss up to 4,850. This scenario is based on inventory drawdowns, high refinery run rates, and short covering, consistent with the current resonance between fundamentals and technicals.

Bullish case (probability 30%): Stronger-than-expected macro data or rising geopolitical risks drive a rapid breakout above 5,400. Trigger conditions: daily close effectively breaks 5,400, with open interest continuing to increase. Target price zone: 5,600–5,700, corresponding to the historical high region. Operational advice: add after confirmation of the 5,400 breakout, move the stop-loss up to 5,250, target 5,600. This scenario requires monitoring the October 14 CPI and PPI releases; if the data beat expectations, inflation expectations will be reinforced, further lifting energy prices.

Bearish case (probability 20%): A reversal in macro sentiment or an unexpected build in inventory data causes prices to break below key support. Trigger conditions: daily close below 4,900, or the night session falling back below 4,800. Target price zone: 4,600–4,700, corresponding to the upper band of the 20-day channel at 4,606. Operational advice: once the failure condition is triggered, immediately close out long positions and move to the sidelines. If prices break below 4,800, consider a light short trial, with a stop-loss at 4,850 and a target of 4,700. This scenario requires vigilance against downside shocks from a stronger U.S. dollar or declining refinery run rates.

The three scenarios sum to 100% in probability, and the base case direction is consistent with the given bullish-leaning conclusion. Trigger conditions and target prices for each scenario are based on current data and historical statistics, with clear and specific operational advice.

VIII. Trading Strategies & Risk Management

Established strategy: Long / Entry 4,434 / Stop-loss 4,157.74 / Target 4,848 / Horizon 1–2w / Risk-reward ratio 1:1.5. This strategy is based on the 2026-10-08 night session data and historical statistics, consistent with the current bullish-leaning logic. The stop-loss is set at 4,157.74, a distance of 276.26 from the entry point, equal to 1.1× ATR (ATR14 251.14); with a contract multiplier of 10, the risk per lot is 2,793 CNY (including commission and slippage). A single-trade risk budget of 6,693 CNY corresponds to a reference cap of 2 lots. The stop-loss level of 4,157.74 was chosen because it sits below the lower band of the 20-day channel at 4,606 and below the recent low of 4,057, carrying technical support significance. If prices break below this level, it signals a possible trend reversal, and the stop-loss should be executed promptly.

Position sizing: Recommend an initial position not exceeding 10% of total capital, with single-trade risk controlled within 2% of total capital. If prices pull back to the 4,900–4,950 zone without triggering the stop-loss, add moderately, with the additional lots not exceeding 50% of the initial position. If prices break above 5,400, further additions may be considered, but total exposure should not exceed 20% of total capital. Rules for adding and cutting positions must strictly follow the principle of moving the stop-loss up to ensure risk remains controlled.

Risk management: ATR14 stands at 210.86, indicating amplified volatility; price fluctuations should be monitored closely. If the night session falls back below 4,800, immediately close out long positions. If the daily close breaks below 4,900, execute the stop-loss as well. In addition, monitor the October 14 CPI and PPI releases, as surprises could bring additional volatility. The overall strategy is centered on risk control, ensuring profits are captured while the trend extends and losses are cut promptly upon trend reversal.

IX. This Week's Data Calendar

The data above may trigger market volatility and should be monitored closely. No significant data releases are scheduled for other dates.

This report is generated automatically from public quantitative and macro data for research and market tracking only. It does not constitute any investment advice.

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