In early April, the fuel oil complex benefitted strongly from weaker crude, at least in the cracks, where both HSFO and VLSFO cracks rallied in both regions. Notably, the May’25 380 crack saw an upside breakout, rallying from -$3 to over $0.50/bbl by 11 April (time of writing). This is backed by rising open interest, with levels in the May crack rising by 40% over the past two weeks and is 70% above the previous 5-year maximum. Another open interest development was the market interest in the May’25 Euro 0.5 crack, with levels doubling over the past two weeks, also surpassing its previous 5-year maximum. For our trade idea, we recommend purchasing a deferred spread to capture cheaper relative value following the crude sell-off as we retain a bullish view going into summer.
