Optimism about travel in Asia boosts demand for jet fuel: S&P Global Platts

Demand for jet fuel in Asia is likely to rebound, with some countries opting to resume operations even as the spread of the delta variant coronavirus is delayed, middle distillate sources told S&P Global Platts.

A glimmer of recovery was seen in the latest report released on September 15 by Singapore Airlines Group, which showed it carried 155,400 passengers in August, compared with 39,800 passengers in the same month last year.

The airline carried about 1.1 million passengers in March 2020 before border restrictions caused by the pandemic severely disrupted air travel worldwide.

"Globally, some highly vaccinated countries are learning to live with the coronavirus," said J.Y. Lim, oil markets adviser at S&P Global Platts Analytics.

"In Asia, Singapore is gradually opening up, allowing quarantine-free travel for those who are fully vaccinated to a select few countries. Other countries are likely to follow suit amid a wider rollout of vaccines in the region," he said.

Lim added that while demand for kerosene/jet fuel is improving and is up 6.6 per cent year-on-year, demand in 2021 will still be lower by almost 31 per cent compared to 2019 levels as international air travel remains limited.

The FOB Singapore cash differential to jet fuel/kerosene fell even deeper to negative values in the first half of September, averaging minus 13 cents a barrel compared to Platts' average estimate for jet fuel/kerosene compared to minus 5 cents a barrel in the first half of August. , Platts data shows.

The market sentiment, however, as assured by Exness Broker remains cautiously optimistic, with the time spread on FOB terms for jet fuel/kerosene in the first half of October to November averaging plus 2 cents a barrel in the first half of September, up 5 cents a barrel from minus 3 cents a barrel in the first half of August.

Strength was also seen in the time spread from Q4 2021 to Q1 2022 - an indicator of medium-term sentiment - which rose by 3 cents a barrel in H1 September to an average of plus 24 cents a barrel, compared with 21 cents a barrel in H1 September. H1 August.