European jet fuel cargo swap values have been well supported in recent days as a lack of scheduled arbitrage barrels arriving from the Persian Gulf and East Asia in December has fueled bullish sentiment, traders said Friday.
The European jet fuel market is traditionally dependent on supplies from the Persian Gulf, East Asia and South America to meet demand with European refineries unable to satisfy airline needs in the busy hub airports.
Through much of the summer, imports from the Persian Gulf and East Asia have been in the region of 1.5 million tonnes/month, according to sources. But December volumes are set to be far lower.
"With the arbitrage into Europe essentially shut from the East we are looking at maybe 1.1 or 1.2 million tonnes in December," said one trader. "With the heavy selling in the physical market that we have seen, that arbitrage has remained shut."
Platts assessed December CIF Northwest European cargo swaps at a premium of $55.50/mt to ICE gasoil futures on Thursday November 18, $7.75 higher than where the same contract was assessed on November 2.
Sources said the relatively low level of likely imports to Europe through December was somewhat offset by the potential for companies to sell jet fuel that is still currently being stored on land and at sea in Europe.
"Though imports are down in December that's sort of offset by oil that could be sold out of storage," said one trader.
Vitol has been a particularly active seller of jet fuel through November, offloading around 360,000 mt during the Platts Market on Close assessment process, with further volumes also sold outside the process, sources said.
Traders said it was likely that much of the material being sold was from storage, though some oil was also likely to have been from imported cargoes.
With Vitol selling heavy volumes, physical cargo differentials have lagged behind the derivatives market with Platts assessing the physical CIF jet fuel cargo premium at $50.75/mt on Thursday November 18.
The European jet fuel market is traditionally dependent on supplies from the Persian Gulf, East Asia and South America to meet demand with European refineries unable to satisfy airline needs in the busy hub airports.
Through much of the summer, imports from the Persian Gulf and East Asia have been in the region of 1.5 million tonnes/month, according to sources. But December volumes are set to be far lower.
"With the arbitrage into Europe essentially shut from the East we are looking at maybe 1.1 or 1.2 million tonnes in December," said one trader. "With the heavy selling in the physical market that we have seen, that arbitrage has remained shut."
Platts assessed December CIF Northwest European cargo swaps at a premium of $55.50/mt to ICE gasoil futures on Thursday November 18, $7.75 higher than where the same contract was assessed on November 2.
Sources said the relatively low level of likely imports to Europe through December was somewhat offset by the potential for companies to sell jet fuel that is still currently being stored on land and at sea in Europe.
"Though imports are down in December that's sort of offset by oil that could be sold out of storage," said one trader.
Vitol has been a particularly active seller of jet fuel through November, offloading around 360,000 mt during the Platts Market on Close assessment process, with further volumes also sold outside the process, sources said.
Traders said it was likely that much of the material being sold was from storage, though some oil was also likely to have been from imported cargoes.
With Vitol selling heavy volumes, physical cargo differentials have lagged behind the derivatives market with Platts assessing the physical CIF jet fuel cargo premium at $50.75/mt on Thursday November 18.
