Asia Distillates-Jet fuel refining margins post third straight weekly drop
Asian jet fuel refining margins dropped on Friday, posting their third consecutive weekly decline, weighed down by persistent weakness in aviation demand. Refining profit margins, also known as cracks, for jet fuel were at $3.53 per barrel over Dubai crude during Asian trading hours, 7 cents lower.
The jet fuel cracks have dropped 13% this week, and remained nearly 70% lower than their five-year seasonal average for this time of the year, Refinitiv Eikon data showed. Prolonged international travel restrictions and sluggish pace of vaccinations in several markets have impacted the aviation demand recovery, while the recent strength in feedstock crude prices have hurt the refining margins, trade sources said. The aviation market is expected to gradually strengthen in coming months as countries lift border restrictions, but a majority of market watchers believe it would take years for the sector to reach pre-pandemic levels.
"I think the aviation sector needs more time to achieve a sustainable or stable recovery. Global vaccines rollouts definitely need more than six months," a Singapore-based trader said. "Our lives, be it personal or for business are never going to be the same as before. We cannot just grab our bags and fly anywhere we want, without having to worry if the place is safe enough." The regional jet fuel market, however, is getting some support as supplies are currently limited with refineries in South Korea not running high and some refineries in Japan scheduled to undergo spring maintenance, traders said.
Cash discounts for jet fuel widened by 10 cents on Friday to 80 cents per barrel to Singapore quotes, the biggest discounts since Oct. 22.
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