Demand increases in European jet fuel market

05 February 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--Higher prices were no deterrent to buyers in the European jet kerosene market this week with nine barge trades taking place, sources said on Tuesday.

However, sources had mixed views on the reasons for the increased trading activity this week, which lasted 30 January-5 February.

An airline source said buyers were looking to secure product in the belief that prices would continue to rise, while a trader said fewer volumes are arriving from Asia, which may have increased prompt demand.

Another trader said the $12/tonne (€9/tonne) backwardation between February and March ICE gasoil contracts was a strong incentive to sell, with many offers seen in the open market trading window.

Morgan Stanley, BP and Vitol were all on the buy side in the barge market with nine barges traded. However, just one cargo changed hands.

Differentials fluctuated during the week, ending slightly softer with barges at $72-74/tonne on Tuesday and cargoes at $78-80/tonne.

A trader said barge differentials were under pressure with refineries continuing to maximise jet kerosene production over diesel as the margins remain attractive.

Sources said the market is well supplied especially in the Mediterranean, which is considered slightly long.

Shipping sources noted around 250,000 tonnes of product destined for the UK-mainland Europe and the Mediterranean from India and the Middle East.

Fixtures were also noted moving product from Amsterdam-Rotterdam-Antwerp (ARA) to west Africa, the UK and Scandinavia. However, a trader said the Scandinavian market is longer than usual and sellers are struggling to place product.

Barge prices reached their highest level for the week on Tuesday 5 February at $1,082.50-1,084.50/tonne FOB (free on board) ARA. This is the highest price seen since mid-October 2012.

($1 = €0.74)


By: Kate Wilcock
+44 208 652 3214



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