LONDON/NEW YORK (UK/US) – Rejuvenated by a rebound in the demand for air cargo and gradual recovery of passenger traffic along with hopes that coronavirus vaccines will spur more overseas travel, international jet fuel markets are staging a recovery.
The outbreak of the pandemic saw air travel grinding to a halt this year and analysts warn that it might take years before the demand for jet fuel returns to pre-pandemic levels.
Buoyed by hopes of higher demand next year, the refining profits for the fuel touched multi-month highs this month. US and European margins were underpinned by a recovery in air cargo volumes and Asian margins also by a rebound in domestic travel and heating consumption.
Jet refining margins in Asia, which is considered the world’s top fuel market, have spiked 580% and export prices by 45% since mid-September to their highest since March. With some countries easing pandemic curbs, domestic flights have picked up.
“We expect vaccines will become available by (the) end of Q1 2021 and some travel restrictions will remain in place,” said Qiaoling Chen, research associate at consultancy Wood Mackenzie in Singapore, predicting Asian jet fuel demand to be 1.4 million barrels per day (bpd) in 2021 first quarter.
It also predicts demand for jet fuel in the region to reach 1.3 million bpd in the fourth quarter of 2020, up by 460,000 bpd from Q2.