Lower prices in European jet kerosene market spark trading surge

10 April 2013 00:01  [Source: ICIS news]

LONDON (ICIS)--There was a surge of activity in open market trading this week, with lower outright prices and a contango market luring jet fuel buyers, sources said on Tuesday.

A total of 17 barges changed hands over the past five trading days (3-9 April) with US-based investment bank Morgan Stanley securing 15 of the trades or around 36,000 tonnes of fuel.

This is the largest number of trades seen in a week since mid-June, because the market endured a continued period of backwardation.

Prices for barges were at $954.50-956.50/tonne (€735-737/tonne) FOB (free on board) ARA (Amsterdam, Rotterdam, Antwerp) on Tuesday.

Despite the growing attractiveness of storage – with ICE gasoil at around a $4/tonne contango between April and May contracts – stocks in the ARA region fell for the third consecutive week.

Stocks for jet kerosene were at 302,000 tonnes on 5 April, down from 309,000 tonnes the previous week.

A trader said there had been a draw on stocks because of a combination of more favourable diesel margins for refiners lowering jet kerosene production and maintenance in other regions reducing the flow of arbitrage vessels.

Barge differentials were at $76-78/tonne on Tuesday while cargoes were trading below barges at $71-73/tonne.

Market participants had varying ideas on why cargoes were trading below barges. However, many felt a correction would occur.

“Cargoes usually trade $5-6/tonne above barges, but the dynamics of the market are changing,” a seller said.

($1 = €0.77)

By: Kate Wilcock
+44 208 652 3214

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