SINGAPORE: Asia’s cash premiums for jet fuel dipped on Wednesday, but stayed close to a multi-month peak scaled earlier this week amid expectations for a gradual recovery in global aviation demand.

Cash premiums for jet fuel were at $1.25 per barrel to Singapore quotes on Wednesday. Differentials on Monday hit $1.94 a barrel, a level not seen since early March 2018.

Scheduled airline capacity in Northeast Asia rose 25.2% in the week to Monday compared with the previous week, while scheduled seats in Central Asia and South Asia increased 5.3% and 2.6% respectively this week, according to aviation data firm OAG.

“In percentage terms, North East Asia has seen the largest increase (in airline capacity) this week, with the return of the Chinese domestic capacity that was removed in the preceding weeks,” OAG said in a statement.

Refining profit margins, also known as cracks, for jet fuel slipped to $13.87 per barrel over Dubai crude during Asian trading hours, compared with $14.91 per barrel a day earlier.

Middle-distillate inventories in the Fujairah Oil Industry Zone climbed 36% to 2.5 million barrels in the week ended Feb. 7, data via S&P Global Platts showed.

The weekly stocks in Fujairah have averaged 1.9 million barrels so far this year, compared with a weekly average of 3.5 million barrels in 2021, Reuters calculations showed. US distillate inventories, which include diesel and heating oil, fell by 2.2 million barrels in the week ended Feb. 4, according to market sources, citing American Petroleum Institute figures.

Two gasoil deals, no jet fuel trades. Oil prices slipped for a third session on Wednesday on profit-taking due to concerns over a possible rise in supplies from Iran despite industry data showing a surprise drop in US oil inventories. Japan will raise its gasoline subsidy for oil distributors to 5 yen a litre for the week starting on Thursday, the country’s industry ministry said.