Asia Distillates-Jet fuel cracks gain, Dec/Jan spread widens

Asia's cash premiums for jet fuel rose on Wednesday

  

SINGAPORE- Asia's cash premiums for jet fuel rose on Wednesday, while the prompt-month spread for aviation fuel in Singapore widened its backwardation structure.

Traders were optimistic jet fuel demand would continue to recovery, while airline executives hope any downside posed by the Omicron coronavirus variant would likely be short-lived. 

Cash differentials for jet fuel were at a premium of 46 cents per barrel to Singapore quotes, up from a 36-cent premium a day earlier.

The Dec/Jan time spread for jet fuel widened by 15 cents on Wednesday to trade at 48 cents per barrel, Refinitiv data showed.

Refining margins, also known as cracks, for jet fuel dipped to $10.09 per barrel over Dubai crude during Asian trade, compared with $10.32 per barrel on Tuesday.

The jet fuel cracks, which also determine the profitability of closely-related kerosene, are expected to get some support in the coming weeks as seasonal heating demand picks up in Japan and Korea ahead of peak winter, traders said.

A warmer winter, however, would weigh on the margins, they added.

Temperature levels in Tokyo and Seoul are expected to stay mostly above normal for the next 45 days, weather forecast models on Refinitiv Eikon showed.

TRAVEL BOOKINGS

- Tour operator TUI, expects travel bookings in summer 2022 to return to pre-pandemic levels, after it posted an annual loss of over 2 billion euros ($2.26 billion) as coronavirus curbs dominated most part of its financial year.

- The world's largest holiday company also said it was close to reaching break-even in the fourth quarter, and it was achieving 69% of pre-crisis capacity levels in the first quarter of the new financial year.

INVENTORIES

- Middle-distillate inventories in the Fujairah Oil Industry Zone rose 25.1% to 2.3 million barrels in the week ended Dec. 6, data via S&P Global Platts showed. 

- The weekly stocks in Fujairah have averaged 3.6 million barrels this year, compared with 4.2 million barrels in 2020, Reuters calculations showed.

- U.S. distillate inventories, which include diesel and heating oil, rose by 1.2 million barrels for the week ended Dec. 3, according to market sources, citing American Petroleum Institute figures. 

SINGAPORE CASH DEALS 

- No jet fuel trades, no gasoil deals

OTHER NEWS

- China's Shandong province, the country's main independent oil refining hub, has turned to a deep-pocketed state-run coal miner to help fund a petrochemical complex it sees as key to the region's industrial future, sources and local state media said. 

- Australia's Woodside Petroleum Ltd plans to invest $5 billion by 2030 mainly in hydrogen, in line with a global push for cleaner energy, armed with cash flow from its planned merger with BHP Group's petroleum arm. 

(Reporting by Koustav Samanta; Editing by Vinay Dwivedi) ((koustav.samanta@thomsonreuters.com (+65 6870 3503)(Reuters Messaging: koustav.samanta.thomsonreuters.com@reuters.net))


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