Asia Distillates: Jet fuel cash premiums linger near multi-year peak

22 Dec, 2021

SINGAPORE: Asia’s cash premiums for jet fuel slipped on Tuesday, but remained within close sight of a multi-year high touched in the previous session as domestic flights support regional aviation demand.

Cash differentials for jet fuel were at a premium of 75 cents per barrel to Singapore quotes. They were at 84 cents per barrel a day earlier, the highest since May 2018.

Refining margins or cracks for jet fuel dipped to $10.71 per barrel over Dubai crude during Asian trading hours, compared with $11.10 a barrel on Monday.

Scheduled capacity for global airlines rose 0.9% to 82 million seats in the week to Monday, aviation data firm OAG said.

“The increase of 703,000 seats comes across Australia, China, Japan and Spain and takes places in mostly domestic markets,” OAG said in a statement.

China’s flight capacity rose 0.8% this week, while seat capacity in Japan was up 3.9%, OAG data showed. New Zealand delayed the planned reopening of its international border as Omicron infections are multiplying rapidly across Europe, the United States and Asia.

Many nations are on high alert just days ahead of Christmas and New Year celebrations, as the latest health crisis also takes a toll on financial markets, which fear the impact on the global economic recovery.

Asia’s gasoil refining profit is on track to jump around 30% this year and expected to climb further in 2022, as the regional market shrugs off the worst of the COVID-19 pandemic with India and China driving demand.

The rapidly spreading Omicron coronavirus variant has led some countries to reimpose lockdown measures, but traders and analysts expect overall fuel demand to continue recovering, albeit more slowly than expected earlier.

No jet fuel trades, no gasoil deals. Oil prices steadied on Tuesday after a sharp fall in the previous session as investors worried about the rapid spread of the Omicron coronavirus variant and the impact of renewed restrictions on fuel demand.

OPEC+ compliance with oil production cuts rose to 117% in November from 116% a month earlier, two sources from the group told Reuters, indicating production levels remain well below agreed targets.

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