Singapore — Front-month jet fuel timespread spotted a 59-week low, flipping into contango Thursday, tracking the continual weakness in the physical market as buying appetite remain dull approaching the end of peak summer travel season. At the Asian close Thursday, the prompt October/November inter-month spread fell 23 cents/b to minus 15 cents/b, nose-diving to its lowest levels this year, S&P Global Platts data showed.
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The last time the forward-month jet fuel timespread was assessed lower was July 27, 2017 when it was at minus 16 cents/b, Platts data showed. The bearishness was also reflected further down the curve with the fourth quarter – first quarter spread dipping 4 cents/b day on day to be assessed at 50 cents/b. On the outright price, the Asia jet fuel swaps fell 39 cents/b day on day to $91.59/b Thursday.
Market participants attributed the weakness to a seasonal change as the peak summer travel season draws to a close. Sources said that cross-regional flows from Asia and the Middle East have slowed down in recent weeks. This came after shipping sources estimated that jet fuel volumes on the North Asia-US West Coast route have hit an annual high of 500,000 mt in August. September volumes were estimated to be around 320,000 mt.
The languid fundamentals have translated to weaker FOB Korea spot jet fuel differentials, falling to a low of minus 40 cents/b to Mean of Platts Singapore jet fuel/kerosene assessment on September 7, from the start of the month when discounts were at minus 30 cents/b.
Buyers for heating oil demand in winter have yet to emerge as it was still too early but they are expected to turn up at the end of October.
The Asian jet fuel spot market usually sees demand peak over November-February when Japanese importers stockpile kerosene for winter heating.
Reflecting the weakness, FOB Singapore jet fuel/kerosene cash differentials have remained in negative territory since August 8.
–Ng Jing Zhi, firstname.lastname@example.org
–Su Yeen Cheong, email@example.com
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