【1】Market Performance: After a slight intraday pullback, the BU 2602 contract largely traded sideways at high levels, closing at 3133 with a gain of 3.95%. The contract hit an intraday high of 3211 and a low of 3111, marking a cumulative increase of +5.2% over the past seven days. Following a period of continuous wide fluctuations, such a sharp gap-up is indeed rare. The next-month contract, 2603, rose 3.60%, while other contracts also generally closed higher. 【2】Spot Market: ① The market price for Shandong Heavy Traffic Asphalt was 2,940 yuan/ton, up 4.1% compared to pre-holiday levels and accumulating a +5.1% gain over seven days. The Shandong basis spread stood at -63 yuan/ton, having increased by 9 yuan/ton over the past week. ② The market price for East China Heavy Traffic Asphalt was 3,130 yuan/ton, rising 1.3% from pre-holiday figures. The East China basis spread was -3 yuan/ton, having decreased by 71 yuan/ton over seven days. 【3】Crack Spread Changes: ① The BU-Brent crack spread was recorded at -10 yuan/ton, accumulating an increase of +88 yuan/ton over seven days. On the day, the BU main contract rose +0.7%, while Brent crude rose +3.7% (calculated based on closing prices at 3:00 PM). The impact of escalating US-Venezuela geopolitical tensions provided a more direct boost to asphalt prices than to oil prices, leading to a significant widening of the BU-Brent crack spread. Given the ongoing geopolitical developments, going long the crack spread—buying asphalt and selling crude oil—is suggested. However, caution is warranted due to geopolitical uncertainty, and prudent position management remains essential during operations. 【4】Fundamental Changes: On the first trading day of the new year, asphalt experienced a rare sharp gap-up surge, primarily influenced by events in Venezuela over the weekend. Merey 16 crude oil (a diluted asphalt brand) from Venezuela is the most preferred feedstock for domestic independent refineries producing asphalt. This preference stems from its compatibility with numerous facilities lacking deep hydrocracking capabilities and its high discount compared to mainstream crudes, yielding a high asphalt output rate suitable for road paving. In 2024, refineries used Merey crude for over 50% of asphalt production. A disruption in Venezuelan crude exports would mean a fracture in the supply of China's primary, most economical asphalt feedstock, forcing refineries to turn to more expensive alternatives such as Middle Eastern Saudi/Basra Heavy crude, Canadian Cold Lake crude, Malaysian Cold Blend crude, and Russian Urals crude. This shift would incur higher transportation costs, quality costs, and facility adjustment costs, directly driving up asphalt production expenses, particularly for refineries without crude import quotas. Although finished asphalt can be imported from Singapore and South Korea, the import cost is higher than producing it from refined feedstock. Although the asphalt market is currently in its seasonal low-demand period, the initial anchor point was the winter storage price. The current sharp price surge driven by the US-Venezuela situation may further speculate on the bottom of the winter storage price, potentially driving it higher. 【5】Short-Term Outlook: Asphalt prices have surged sharply, reaching the highest level since early November last year. The degree of geopolitical pricing appears excessive, leading to high price volatility. However, oil price performance today lagged behind asphalt, primarily showing minor declines, warranting vigilance against potential drag on asphalt prices from the cost side. Additionally, close attention should be paid to political developments; any signs of easing tensions could trigger a significant technical correction and pullback in asphalt prices. While geopolitical sentiment continues to develop, the short-term view on asphalt prices is cautiously bullish with expectations of volatile but stronger trading. 【6】Strategy: Cautiously bullish; long the 02/03 contracts; long the BU-Brent crack spread. Pay attention to position control.