Asian jet fuel buyers are getting the biggest cash discounts in nearly five months as the differentials are weighed down by plentiful supplies in the region and muted demand from the aviation sector.
Cash discounts for jet fuel were at 30 cents per barrel to Singapore quotes on Wednesday, levels not seen since June.
The differentials now stand at their lowest levels for this time of the year since 2016, Refinitiv data showed.
There are ample supplies of jet fuel, while the aviation sector is taking a beating from slowing economic activity, and the China-U.S. tensions over trade have dampened air freight demand, trade sources said.
“I’m hearing China’s jet fuel exports for November and December would likely be on the higher side,” a Singapore-based trader said on Thursday, declining to be identified as he was not authorized to speak to media.
“That could put even more supply in the market.”
The return of some regional refineries from planned maintenance is expected to add to the supply glut in the near term, industry sources said.
Air passenger demand for Asia-Pacific airlines, which make up more than a third of the global aviation market, has been well below long-term average growth in recent months, data from the International Air Transport Association (IATA) shows.
“The overall passenger demand is ebbing… With economic growth slowing down, disposable income of people is also slowing down. So, discretionary travel is taking a hit,” said Sukrit Vijayakar, director of Indian energy consultancy Trifecta./Investing.com