Mixed fundamentals in Europe jet fuel market

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

LONDON (ICIS)--Sentiment and fundamentals in the European jet kerosene market are mixed this week as low demand and good supply contrast with strong differentials, sources said on Tuesday.

Cargo differentials on Tuesday were at $88-90/tonne (€66-68), an $11/tonne premium over barges.

A trader said the strong cargo differentials were a result of Asian demand for dual purpose kerosene (DPK) for heating requirements, as the region is still experiencing an extremely cold winter.

Another source agreed Asian demand was a key factor in strong prices, but noted the cold weather on the east coast of the US was having a reverse affect, as airports were shut down and flights cancelled, creating less demand for jet kerosene.

Prices firmed for most of the week (6-12 February) on the back of strong Intercontinental Exchange (ICE) gasoil values, with cargoes and barges both tipping over the $1,100/tonne mark before retreating.

An airline source said the strong cargo differentials are bringing up barge differentials – which should be lower considering the current fundamentals of low demand and a well supplied market.

Despite a backwardation of $8/tonne between March and April ICE gasoil contracts, which limits the incentive to store fuel, stocks for jet kerosene in the Amsterdam-Rotterdam-Antwerp (ARA) region were at 370,000 tonnes on 7 February, up from 322,000 tonnes the previous week.

In open market trading this week, Vitol, BP, Morgan Stanley and Statoil were all on the buy side in the barge market, with seven barges traded. In the cargo market, Morgan Stanley was again active, buying two 30,000-tonne cargoes from Vitol.

($1 = €0.75)

By: Kate Wilcock
+44 208 652 3214

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