Jet gas costs up as demand jumps, refinery outages restrict provide
By Shariq Khan, Laura Sanicola and Seher Dareen
(Reuters) – Jet gas costs have risen to ranges by no means recorded in January as demand from China’s lifting of COVID-19 journey restrictions and U.S. refinery outages, with the surge prone to proceed, analysts and refining executives say.
Chinese language flight exercise has greater than tripled since early December to greater than a median of 10,700 flights per day, in line with knowledge from flight monitoring agency Airportia. Jet gas this 12 months would be the largest supply of oil demand development, says the Worldwide Power Company, which screens power consumption.
This month’s demand ought to hit 6.6 million barrels per day, the very best studying since February 2020, mentioned Viktor Katona, an analyst at knowledge agency Kpler.
Costs are climbing in Asia, Europe and america. In Singapore, jet gas is buying and selling round $122.30 per barrel, up 14% within the final two weeks. Europe’s value for the gas has climbed to $115 per tonne, the very best since June. New York spot costs had been quoted on Thursday at $2.45 above U.S. ultra-low sulfur diesel, a premium not seen presently of the 12 months since a minimum of 2011.
Refining outages in america are feeding the value run-up. Chilly climate alongside the U.S. Gulf Coast just lately knocked out some processing crops and pushed up the premium for jet gas, mentioned Gary Simmons, chief business officer at Valero Power.
“General, we count on jet demand to extend considerably this 12 months,” he informed an earnings name on Thursday, as air journey continues to rise. U.S. East Coast provides are prone to stay scarce till mid-February, he mentioned.
A Feb. 5 European Union embargo on imports of seaborne Russian refined merchandise can even stress European provides and can improve the decision on U.S. refiners to fill the hole, analysts mentioned.
U.S. jet gas inventories ended final 12 months at 34 million barrels, the bottom since 1990, in line with U.S. authorities knowledge. Whole jet gas equipped, a proxy for demand, stood at 1.56 million barrels per day in 2022, the very best since 2019.
(Reporting by Laura Sanicola, Shariq Khan and Seher Dareen; further reporting Arpan Varghese; Enhancing by Josie Kao)