Prices for jet fuel in Northwest Europe are rising steadily on a fall in the quantity of arrivals reaching the market, a healthy contango encouraging holding stock in land tanks and greater demand from airlines, traders said Wednesday.
Jet CIF NWE paper indications have underscored the upward move, with the front month December swap gaining $3.50/mt in one day, rising from $58/mt on Monday to be assessed at $61.50/mt at Tuesday's close, according to Platts data.
Early indications suggest the December swap traded at $62.50/mt Wednesday, while physical jet premiums have also gained ground over the course of the week.
Platts data shows the physical CIF NWE premiums for jet fuel have risen from a premium of plus $44/mt over the front month ICE gasoil contract on November 15, to be assessed at plus $58/mt Tuesday.
"It's mainly been driven by how much stock Europe's been drawing over the last few weeks," one trader said, as end-user demand has soaked up available supply released from floating storage.
In addition, a fall in the volume of arrivals of jet fuel from typical arbitrage supply locations such as the Middle East, has cut flows into the region.
"We are seeing less than the July/August/September volumes," a second trader said, with the first trader expecting volumes through November and December to fall from a mid-summer peak of around 2 million mt, to around 1.2 million mt.
A fall in flat prices, as the crude complex retreats from the highest prices since mid-2008, has sparked some buying interest from airlines again, while the longer term prognosis for the airline industry continues to be talked up as the global economic recovery finds a surer footing.
"A drop in the flat price means more airlines are coming in, and they're wise to get involved. We've seen the flat price give up $5/b over the last couple of weeks," the second trader said.
Flat prices have plunged from a year-to-date high of $805.75/mt -- the highest level since October 9, 2008 -- to end Tuesday at $757.25/mt, a loss of nearly $50/mt, or $6.50/b.
The widest contango in the ICE gasoil contract since mid-August has also ensured product held in shore tanks remains in tank, with the second month ICE gasoil contract some $4.75/mt above the December front month contract, providing enough incentive to store product, traders said.
Jet CIF NWE paper indications have underscored the upward move, with the front month December swap gaining $3.50/mt in one day, rising from $58/mt on Monday to be assessed at $61.50/mt at Tuesday's close, according to Platts data.
Early indications suggest the December swap traded at $62.50/mt Wednesday, while physical jet premiums have also gained ground over the course of the week.
Platts data shows the physical CIF NWE premiums for jet fuel have risen from a premium of plus $44/mt over the front month ICE gasoil contract on November 15, to be assessed at plus $58/mt Tuesday.
"It's mainly been driven by how much stock Europe's been drawing over the last few weeks," one trader said, as end-user demand has soaked up available supply released from floating storage.
In addition, a fall in the volume of arrivals of jet fuel from typical arbitrage supply locations such as the Middle East, has cut flows into the region.
"We are seeing less than the July/August/September volumes," a second trader said, with the first trader expecting volumes through November and December to fall from a mid-summer peak of around 2 million mt, to around 1.2 million mt.
A fall in flat prices, as the crude complex retreats from the highest prices since mid-2008, has sparked some buying interest from airlines again, while the longer term prognosis for the airline industry continues to be talked up as the global economic recovery finds a surer footing.
"A drop in the flat price means more airlines are coming in, and they're wise to get involved. We've seen the flat price give up $5/b over the last couple of weeks," the second trader said.
Flat prices have plunged from a year-to-date high of $805.75/mt -- the highest level since October 9, 2008 -- to end Tuesday at $757.25/mt, a loss of nearly $50/mt, or $6.50/b.
The widest contango in the ICE gasoil contract since mid-August has also ensured product held in shore tanks remains in tank, with the second month ICE gasoil contract some $4.75/mt above the December front month contract, providing enough incentive to store product, traders said.
