Asia distillates-jet fuel cash differentials flip to premiums

Asia's cash differentials for jet fuel flipped into premiums for the first time this year on Tuesday, partly supported by firmer deals in the physical market, while prompt-month spread for the aviation fuel stood at its narrowest contango in more than two months.

The jet fuel market in Asia is getting support from recovering aviation demand in key markets including China and Australia, but any further upside would be capped in the near term due to COVID-19 lockdowns in India, trade sources said.

Indian opposition leader Rahul Gandhi called for a nationwide lockdown as the country's tally of coronavirus infections surged past 20 million. India's scheduled flight seat capacity dropped 6.5% in the week to Monday, according to aviation data firm OAG.

Scheduled flight seats in China, however, were 0.8% higher in the week to Monday compared with the previous week, while scheduled seats in Australia were up 0.3% from last week, OAG data showed. Cash differentials for jet fuel were at a premium of 9 cents a barrel to Singapore quotes on Tuesday, the strongest since February 2020. They were at a discount of 18 cents per barrel a day earlier.

The May/June time spread for jet fuel in Singapore traded at a discount of 3 cents per barrel, compared with minus 6 cents on Monday. Refining margins for jet fuel were at $5.88 per barrel over Dubai crude during Asian trading hours, still within close sight of a more than one-year high of $6.02 per barrel touched in the previous session.

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