SINGAPORE: Asia’s cash premiums for jet fuel rose to a record high on Tuesday, lifted by a strong deal in the physical trade window, while the prompt-month time spread for the aviation fuel in Singapore widened its backwardated structure.
Cash differentials for jet fuel were at a premium of $3.24 a barrel to Singapore quotes, compared with $2.84 per barrel a day earlier.
The March/April time spread for jet fuel traded at $7.80 per barrel on Tuesday, against $7.27 per barrel a day earlier, Refinitiv Eikon data showed.
The nascent recovery in aviation demand, however, would likely come under renewed pressure as steep jet fuel prices prompt airlines to introduce fuel surcharges on tickets and increase fares, burdening cost-sensitive travellers, trade sources said.
Qantas Airways said it expects airfares will need to rise to cover the cost of higher fuel prices as its oil hedging contracts expire, while Malaysia’s AirAsia introduced fuel surcharges on tickets for the first time since 2015. Global airline capacity dipped 0.1% this week to 82 million seats, 23% lower compared with the corresponding week in pre-pandemic 2019, according to aviation data firm OAG.
Total scheduled airline capacity in North East Asia in the week to Monday dropped 4.5% from the previous week, while scheduled seats in Central Asia were down 3.1%, OAG data showed.
Asian refining margins, or cracks, for jet fuel were at $24.42 per barrel over Dubai crude on Tuesday, down from Monday’s $26.17 a barrel over Dubai crude, their strongest level on record, according to Refinitiv Eikon data that goes back to 2009.
Meanwhile, cracks for 10 ppm gasoil dropped to $31.56 a barrel over Dubai crude during Asian trading hours, down from an all-time high of $33.70 a barrel on Monday.
One jet fuel trade, one gasoil deal. Some Asian refineries plan to increase output in May to cash in on high prices for gasoil exports to Europe, even as the steepest crude prices in 14 years threaten profit margins, numerous trade sources said.
Oil prices rose on Tuesday, with Brent surging past $126 a barrel, as fears of formal sanctions against Russian oil and fuel exports spurred concerns about supply availability.