SINGAPORE: Asia’s jet fuel cash premiums dipped on Monday on concerns that the aviation fuel market may lose steam over the next couple of months, and upcoming summer demand will not provide as firm a support as expected.
Cash differentials for jet fuel fell to 99 cents a barrel to Singapore quotes on Monday, from $1.02 on Friday.
Summer travelling demand for jet fuel may not be as robust as the winter heating demand for kerosene this year, and the market might not sustain its strength beyond May, traders said.
Jet fuel and kerosene are closely related and belong to the same grade of oil products, with jet fuel margins determining the profitability of both.
Meanwhile, cash premiums for 10ppm gasoil inched up to 26 cents a barrel to Singapore quotes, compared with 22 cents on Friday.
However, Chinese diesel shipments headed for the West are weighing on market sentiment, traders said, as that indicates that the region has too much diesel stock.
China’s Unipec is planning its third very large crude carrier (VLCC) shipment of diesel in May from Tianjin to Europe or West Africa. A VLCC can transport about 2 million barrels of oil at a time.
“Three VLCCs mean about six million barrels of diesel shipments. Adding that to the gasoil stocks in Asia will bring the numbers to around 17 million barrels (in Singapore stocks) and that level of inventories has never been seen in Singapore,” said Sukrit Vijayakar, director of energy consultancy Trifecta.
China is shipping towards the West to make sure Asian prices do not drop on its supplies, Vijayakar added.
Singapore onshore middle distillate stocks were about 11.2 million barrels in the week to April 11, the latest International Enterprise (IE) data showed. The highest on record for middle distillates stocks in Singapore was 16.6 million barrels in August 2010.