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Jet cash discounts widen, cracks hit record low

Asia’s cash differentials for jet fuel weakened on Monday, while refining margins for the aviation fuel plunged to a record low as airlines kept the majority of their flights grounded amid extensive travel restrictions to contain the coronavirus pandemic.
Cash discounts for jet fuelwidened to $4.50 a barrel to Singapore quotes on Monday, compared with $4.48 a barrel on Friday.

The jet spot differentials, which hit a record low of minus $4.52 a barrel last week, are currently at their lowest seasonal levels, according to data on Refinitiv Eikon that goes back to 1998.

Refining margins, also known as cracks, for jet fuel dropped to $4.87 a barrel below Dubai crude during Asian trading hours on Monday, Refinitiv Eikon data showed. They were at a discount of $1.98 per barrel to Dubai crude on Friday.

The global jet fuel market has been the hardest hit from the coronavirus and could take years to recover from the crisis in terms of passenger demand with possible changes in the habits of tourists and business travellers.

Airlines in Asia-Pacific would see their biggest revenue drop of $113 billion in 2020 compared with 2019, and a 50% decline in passenger demand, the International Air Transport Association (IATA) said on Friday.

Among major aviation markets in the region, India’s passenger demand is expected to drop 47% this year versus 2019, Thailand’s will drop by 52%, while Indonesia’s will plunge 49% year-on-year, according to IATA estimates.

“Airlines continue to perform an important role currently with the transport of essential goods, including medical supplies, and the repatriation of thousands of people stranded around the world by travel restrictions,” Conrad Clifford, IATA’s Regional Vice President, Asia-Pacific said in a statement.

“And after the COVID-19 pandemic is contained, governments will need airlines to support the economic recovery, connect manufacturing hubs and support tourism. That’s why they need to act now ? and urgently – before it is too late,” he added.

The May/June time spread for jet fuel in Singapore traded at a discount of $3.20 per barrel on Monday.

Meanwhile, cracks for the benchmark gasoil grade with 10 ppm sulphur content in Singapore slid to $2.83 a barrel over Dubai crude on Monday, the lowest on record in Refinitiv Eikon data that goes back to January 2014. They were at $5.27 a barrel on Friday.

Cash differentials for 10 ppm gasoil were at a discount of $2.13 per barrel to Singapore quotes on Monday, compared with a discount of $2.340 a barrel on Friday.

SINGAPORE CASH DEALS

– No jet fuel trades, no gasoil deals
Source: Reuters (Reporting by Koustav Samanta; Editing by Ramakrishnan M.)

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