Demand for jet fuel in Asia is likely to be on the path to recovery with some countries opting to reopen even as the spread of delta variant of coronavirus lingers, middle distillate sources told S & P Global Platts.
A glimpse of recovery was seen in the latest report released on September 15 by Singapore Airlines Group which showed it flew 155,400 passengers in August, compared with just 39,800 passengers over the same month last year.
The airline carried about 1.1 million passengers in March 2020 before pandemic-induced border restrictions severely crippled air travel globally.
“Globally, some countries with high rates of vaccination are learning to live with the coronavirus,” said J Y Lim, Advisor for oil markets at S & P Global Platts Analytics.
“In Asia, Singapore is slowly opening up by allowing quarantine-free travel for those who are fully vaccinated with a few selected countries. Other countries are likely to follow amid a wider rollout of vaccines in the region,” he said.
Lim added that while the kerosene/jet fuel demand is improving and is up by 6.6 per cent from last year’s level, 2021 demand will still be lower by close to 31 per cent versus 2019 levels as international air traffic remains constrained.
The FOB Singapore jet fuel/kerosene cash differential sank deeper into negative territory in first-half September at an average of minus 13 cents per barrel to Mean of Platts jet fuel/kerosene assessment, compared with minus 5 cents per barrel in first-half August, Platts data shows.
Market sentiment, however, remains cautiously optimistic with the front-month October to November FOB Singapore jet fuel/kerosene time spread averaging plus 2 cents per barrel in H1 September, up 5 cents per barrel from minus 3 cents per barrel in H1 August.
Strength was also seen in the Q4 2021-Q1 2022 time spread — an indication of medium-term sentiment — which was up 3 cents per barrel in H1 September to an average of plus 24 cents per barrel compared with 21 cents per barrel in H1 August.
