SINGAPORE: Asian cash premiums for jet fuel rose on Tuesday, lingering close to record highs from last week as global aviation demand recuperates and airlines raise capacity for the next few months.
Cash differentials for jet fuel, which have more than doubled in the last two weeks, were at a premium of $7.74 a barrel to Singapore quotes, compared with $7.44 per barrel a day earlier.
Global airline capacity rose 3.2% this week to 83.4 million seats, still about 23% lower compared with the corresponding week in pre-pandemic 2019, according to aviation data firm OAG.
Total scheduled airline capacity in South Asia in the week to Monday rose 5.3% from the previous week, while scheduled seats in South East Asia were up 3.9%, OAG data showed.
But a rise in COVID-19 cases in Shanghai has seen the city enter a new period of lockdown resulting in the removal of over 1.1 million seats from the Chinese domestic market, OAG said in a statement.
Refining margins, or cracks, for jet fuel dropped to $24.03 per barrel over Dubai crude during Asian trading hours, compared with $25.05 per barrel on Monday.
Anti-COVID lockdowns have dampened consumption of transportation fuels in China to a point where some independent refiners have resorted to trying to resell crude purchased for delivery over the next two months, traders and analysts said.
While other nations ease restrictions as they rebound from the pandemic, China has adhered to a ‘zero COVID-19” policy, imposing strict restrictions to stop the virus from spreading, although its caseload is modest by global standards.
Shanghai’s lockdown has also crimped jet fuel demand, though there are other factors at play in the aviation sector, including an air disaster last week that was China’s worst in 28 years.
No gasoil deals, no jet fuel trades. Oil prices rose on Tuesday, recovering some of the previous session’s losses as Kazakhstan’s supplies continued to be disrupted and major producers showed no sign of being in a hurry to boost output significantly.
Russia said on Monday it will not supply gas to Europe for free as it works out methods for accepting payments for its gas exports in roubles but G7 nations refused the demand.
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