SINGAPORE: Asian refining margins for jet fuel plunged to a three-week low on Thursday as airlines trimmed capacity amid surging Omicron infections, while cash differentials for the aviation fuel in Singapore slid to their smallest premiums in more than a month.
Refining margins or cracks for jet fuel dropped to $10.55 per barrel over Dubai crude during Asian trading hours, the lowest since Dec. 8. They were at $11.02 per barrel a day earlier.
Global COVID-19 infections have hit a record high over the past seven-day period, Reuters data showed, as the Omicron variant raced out of control and governments tried to contain its spread without paralysing fragile economies.
Airlines in Hong Kong have been told non-mainland China passenger flights will lose all quarantine-related exemptions effective midnight on Wednesday, the South China Morning Post reported.
Cash premiums for jet fuel fell to 1 cent per barrel to Singapore quotes on Thursday, the lowest since Nov. 18.
The front-month spread for jet fuel narrowed it backwardation on Thursday to trade at 28 cents per barrel, compared with 36 cents a barrel on Wednesday.
Singapore’s middle distillate inventories slipped 0.3% to a three-week low of 7.9 million barrels in the week to Dec. 29, according to Enterprise Singapore data.
Weekly Singapore middle distillate inventories have averaged 11.8 million barrels this year, compared with an average of 13.9 million barrels in 2020, Reuters calculations showed. This week’s stocks were 48.1% lower than a year earlier.
US distillate inventories, which include diesel and heating oil, fell by 1.7 million barrels last week, versus expectations for a 0.2 million-barrel rise, the Energy Information Administration said on Wednesday. South Korea’s GS Caltex was offering 300,000 barrels of 500 ppm gasoil for Jan. 14-18 loading from Yeosu. The tender closes on Dec. 30 and has same-day validity.
No gasoil deals, no jet fuel trades. Oil prices eased on Thursday after the world’s top importer China cut the first batch of crude import allocations for 2022, offsetting the impact of US data showing fuel demand had held up despite soaring Omicron coronavirus infections.
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