MOSCOW (MRC) -- Asia's cash premiums for jet fuel slipped to their lowest in more than three weeks on Friday, posting a weekly drop, as airlines continue to struggle with weak capacity amid Omicron-led travel restrictions, reported Reuters.
Cash premiums for jet fuel dropped to 28 cents per bbl to Singapore quotes on Friday, the lowest since Nov. 29. The differentials have shed nearly 63% this week.
"Jet fuel demand this year has been largely undermined by travel restrictions. Even with the re-opening of borders across several Asian countries in recent months, international air travels are still limited, and jet fuel demand recovery has been relatively weak," said Serena Huang, Asia lead analyst at Vortexa.
Asia's jet fuel refining margins are on track to double by end-2021 from the previous year, but traders and analysts say it would likely take until the middle of this decade for aviation demand to return to pre-COVID levels.
Just as vaccinations and re-opening of national borders raised hopes for a pick-up in air travel, the highly contagious COVID-19 Omicron variant emerged last month, prompting governments to impose lockdowns and travel curbs again.
The refining margins, also known as cracks, for jet fuel dipped to USD11.05 per bbl over Dubai crude during Asian trading hours, 34 cents lower from a day earlier.
As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.
We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.
We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, EIA said in a monthly report earlier this year, a smaller decline than its previous forecast for a drop of 210,000 bpd.