SINGAPORE: Asian refining margins for jet fuel rose on Wednesday, lifted by expectations of firmer demand in the coming months, but traders were concerned that the lockdowns in China would be a drag on the region’s biggest aviation market.

Refining profit margins, also known as cracks, for jet fuel rose for the first time in four session to $25.45 per barrel over Dubai crude during Asian trading hours, compared with $24.03 per barrel a day earlier.

A phased, two-week long lockdown in Shanghai has crimped jet fuel demand as passenger numbers have dropped sharply on the COVID-19 scare, 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. A gradual recovery in global airline capacity, however, would limit any major slide in jet fuel fundamentals, trade sources said. Cash premiums for jet fuel rose to $8.24 a barrel to Singapore quotes, just 1 cent lower than a record high touched last week. They were at a premium of $7.74 a barrel on Tuesday. The front-month time spread for jet fuel in Singapore, which has stayed in backwardation so far this year, traded at $7.80 per barrel on Wednesday, compared with $6.65 per barrel in the previous session.

Middle-distillate inventories in the Fujairah Oil Industry Zone dipped 2,000 barrels to 1.8 million barrels in the week ended March 28, data via S&P Global Commodity Insights showed.

Weekly stocks in Fujairah have averaged 1.9 million barrels so far this year, compared with 3.5 million barrels in 2021, Reuters calculations showed. US distillate inventories, which include diesel and heating oil, fell by 215,000 barrels in the week ended March 25, according to market sources, citing American Petroleum Institute figures.

Two gasoil deals, no jet fuel trades. Kazakhstan is set to lose at least a fifth of its oil production for a month after storm damage to export facilities, the energy ministry said on Tuesday, adding to concerns about global oil supplies and boosting crude prices.