Asia Distillates-Jet cracks ease from multi-week high as aviation demand struggles
Asian refining margins for jet fuel dipped on Wednesday after hitting a more than two-month high in the previous session as aviation demand continued to struggle amid surging COVID-19 cases in several countries. Refining profit margins or cracks for jet fuel in Singapore slipped 3 cents to $2.05 per barrel over Dubai crude during Asian trading hours.
The cracks hit their strongest since July 28 on Tuesday, thanks to tightening supplies. The jet fuel cracks, which have gained about 58% since the end of last week, however, are at their weakest seasonal levels on record, Refinitiv Eikon data showed. Industry analysts said the profit margins were likely to remain a fraction of long-term averages for now as a substantial recovery in aviation demand was not expected until the second half of next year due to reimposed coronavirus restrictions in many markets.
"Strict mitigation measures are being eased in certain markets... although those over the aviation sector will probably be the last ones to go, with imported cases posing real threats to undo individual government efforts to contain local outbreaks," said Peter Lee, a senior oil & gas analyst at Fitch Solutions. "Essential travels and select category of business travels are being permitted in more markets, but the same for leisure flights is perhaps not on the cards, until a vaccine is made available." Cash discounts for jet fuel widened to 52 cents a barrel to Singapore quotes on Wednesday, compared with a 50-cent discount per barrel a day earlier.
(Reporting by Koustav Samanta;)
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