Jet fuel prices up as demand jumps, refinery outages limit supply

By Shariq Khan, Laura Sanicola and Seher Dareen

– Jet gasoline costs have risen to ranges by no means recorded in January as demand from China’s lifting of COVID-19 journey restrictions and U.S. refinery outages, with the surge more likely to proceed, analysts and refining executives say.

Chinese language flight exercise has greater than tripled since early December to greater than a mean of 10,700 flights per day, in line with information from flight monitoring agency Airportia. Jet gasoline this yr would be the largest supply of oil demand progress, says the Worldwide Vitality Company, which displays vitality consumption.

This month’s demand ought to hit 6.6 million barrels per day, the best studying since February 2020, mentioned Viktor Katona, an analyst at information agency Kpler.

Costs are climbing in Asia, Europe and the US. In Singapore, jet gasoline is buying and selling round $122.30 per barrel, up 14% within the final two weeks. Europe’s value for the gasoline has climbed to $115 per tonne, the best since June. New York spot costs have been quoted on Thursday at $2.45 above U.S. ultra-low sulfur diesel, a premium not seen right now of the yr since at the very least 2011.

Refining outages in the US are feeding the value run-up. Chilly climate alongside the U.S. Gulf Coast lately knocked out some processing crops and pushed up the premium for jet gasoline, mentioned Gary Simmons, chief business officer at Valero Vitality.

“Total, we count on jet demand to extend considerably this yr,” he advised an earnings name on Thursday, as air journey continues to rise. U.S. East Coast provides are more likely to stay scarce till mid-February, he mentioned.

A Feb. 5 European Union embargo on imports of seaborne Russian refined merchandise may even strain European provides and can improve the decision on U.S. refiners to fill the hole, analysts mentioned.

U.S. jet gasoline inventories ended final yr at 34 million barrels, the bottom since 1990, in line with U.S. authorities information. Complete jet gasoline provided, a proxy for demand, stood at 1.56 million barrels per day in 2022, the best since 2019.