Asia-Pacific jet fuel prices have strengthened because of unplanned refinery closures in northeast Asia and an unexpected rise in demand from the US west coast.
The Singapore jet fuel refining margin, or the premium of Argus Singapore jet fuel to Dubai crude swaps, rose to the highest level since mid-December at around $5-5.50/bl today, despite weakening kerosine demand in Japan as winter comes to an end. Refinery closures in the US because of severe weather, and in Japan following an earthquake, have supported the market.
Shipping fixtures show state-controlled Saudi Aramco's trading arm ATS provisionally chartered the River Shiner to load 60,000t (470,000 bl) of jet fuel from South Korea to move towards the US west coast (USWC).
Trans-Pacific jet fuel cargoes loading from north Asia towards USWC are normally shipped in 300,000 bl Medium Range vessels. The bigger 470,000 bl cargo size could be the result of a potential shortfall in US supplies and an attempt to take advantage of higher prices in the US, market participants said.
Severe cold sweeping across Texas has cut power supplies to millions of customers and disrupted at least 3.3mn b/d of refining capacity. Refiners faced natural gas curtailments and rolling electric blackouts as the state's struggling power grid focused on meeting residential demand.
In northeast Asia, Japanese refiners have halted operations at some refineries following a 7.3 magnitude earthquake offshore Fukushima on 13 February. Five crude distillation units with a combined capacity of 720,000 b/d are currently off line in Japan because of the earthquake, turnarounds, fire impact or other reasons.
A string of planned refinery turnarounds in Asia-Pacific will further tighten jet fuel supplies during March-April 2021, potentially supporting prices.
But any fundamental recovery in jet fuel demand is still distant. Tighter travel restrictions imposed by governments at the start of this year to guard against new variants of Covid-19 have placed further pressure on the jet fuel market, which is already struggling to recover from an unprecedented slump in demand.
