Cold weather, low stocks pressure Europe jet-kerosene market

23 October 2012 20:17  [Source: ICIS news]

LONDON (ICIS)--A combination of low jet kerosene stocks and the onset of cold weather could put more pressure on an already tight market, sources said on Tuesday.

The UK Met Office has forecast the first cold weather this weekend.

A buyer said normally the cold season is factored in. However the current combination of market backwardation, low storage levels and refinery turnarounds could cause supply issues.

“If someone sneezes the whole market will catch a cold,” the buyer said.

During winter, demand for dual-purpose kerosene (DPK) rises as it is used for heating.

A broker said kerosene buyers had been active in the previous weeks. However it was at a high price.

“The small amounts of kerosene that are coming in are being held onto,” the broker said.

“Buyers are hoping the market will return to normal soon, otherwise we’ll be in difficulty.”

The latest figure for the Amsterdam-Rotterdam-Antwerp (ARA) region stocks for jet kerosene on 18 October was at 275,000 tonnes, down from 311,000 tonnes the previous week and considered at very low levels by market participants.

However, fresh flows of arbitrage volumes into northwest Europe could ease the supply pressures.

Shipping sources noted around 625,000 tonnes of product destined for loading between 18 October and 1 November.

Another source said the total volumes headed for the region could total 2m tonnes, which would greatly reduce the current tightness in the market and ease prices.

By: Kate Wilcock
+44 208 652 3214

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