MOSCOW (MRC) -- On November 26, US jet fuel inventories were at their lowest level since late 2014, according to the EIA's weekly petroleum status report. Refineries produced less jet fuel in October compared with this summer, and since August, jet fuel demand has increased to near pre-pandemic levels. This increased demand, along with reduced production, has caused inventories to decline, according to Hydrocarbonprocessing.
High jet fuel inventories in summer 2021 were the result of increased refinery production during a period of high market demand for gasoline and distillate. This high demand encouraged refiners to process more crude oil, and jet fuel is a byproduct of crude oil refining. Hurricanes along the Gulf Coast in August contributed to temporary refinery outages and reduced production, which brought jet fuel inventories to more normal seasonal levels. For the week ending September 3, total jet fuel inventory fell below its previous five-year average.
Jet fuel demand (measured as product supplied) has been well below its 2019 average of 1.74 MMbpd since the onset of the COVID-19 pandemic. In most weeks since mid-August, jet fuel consumption has been within 20% of 2019 levels, according to the weekly petroleum status report. By comparison, in November 2020, US jet fuel demand averaged 1.13 MMbpd, or about two-thirds of its 2019 average value.
As MRC reported earlier, g;obal jet fuel markets stayed under pressure on Tuesday as more countries expanded border restrictions to keep the new Omicron coronavirus variant at bay, prompting travelers to reconsider their plans. Jet fuel demand - the biggest laggard in the oil complex - had been forecast to post the strongest growth of 550,000 bpd to 5.9 MMbpd in fourth quarter, according to the International Energy Agency in its Nov. 16 report. But now Omicron poses the greatest risk to jet fuel consumption. Hong Kong expanded a ban on entry for non-residents from several countries, the latest to expand travel curbs after Israel and Japan have already announced border closures to all foreign travelers.
We remind that the Omicron coronavirus variant kicked oil prices lower in late November and sapped refining margins, but with crude futures rallying several days later, the impact could be limited. Oil prices plunged more than 10% on Friday - their largest daily drop since April 2020 - but recovered some of those losses on 29 November, standing up nearly 5% on the day. Analysts said the Friday sell-off had been excessive. Refining margins fell further, increasing the impact of new coronavirus curbs that had already been rolled out in Europe.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 2,047,100 tonnes in the first ten months of 2021, up by 17% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,226,530 tonnes in January-October 2021, up by 26% year on year. Supply of propylene homopolymers (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding stat-copolymers of propylene (PP random copolymers) decreased significantly.