SINGAPORE- Asian refining margins for jet fuel rose on Tuesday, surging to their strongest level in more than 16 months, riding on improved airline capacity in some markets and expectations that wider vaccinations would help boost aviation demand in coming months.
Refining profit margins, or cracks, for jet fuel in Singapore rose 3 cents to $6.75 per barrel over Dubai crude during Asian trading hours, a level last seen in March 2020.
Scheduled capacity for global airlines in July was up 18.5% from June, thanks to "significant recovery in some, but not all, markets," aviation data firm OAG said in a statement.
"Looking forward, August capacity is currently expected to be 5% up on July, although as we have seen repeatedly, capacity continues to be revised downwards by airlines at short notice."
China's flight capacity in the week to Monday was 9.7% lower compared with last week, but seat capacity in Japan and India this week climbed 11.6% and 6.7% respectively, OAG data showed.
Despite persistent border restrictions, the Asian jet fuel market is bolstered by steady arbitrage demand from the U.S. and Europe, trade sources said.
Britain reopened its borders to large parts of the world on Monday, scrapping quarantine for fully vaccinated arrivals from the European Union, excluding France, and the United States.
Cash discounts for jet fuel widened by a cent to 20 cents per barrel to Singapore quotes on Tuesday.
SINGAPORE CASH DEALS
- No gasoil deals, no jet fuel trades
- Oil rose on Tuesday on expectation of a continuous decline in U.S. oil inventories, recouping some losses from the previous session due to lingering concerns over rising cases of the Delta coronavirus variant.
(Reporting by Koustav Samanta; Editing by Shailesh Kuber) ((email@example.com )( +65 6870 3503) (Reuters Messaging: firstname.lastname@example.org))