SINGAPORE- Asian refining margins for jet fuel dropped for a fourth consecutive session on Tuesday, sliding to their weakest level in nearly a month, weighed down by persistent weakness in regional aviation demand as Southeast Asia battles the infectious Delta variant of the coronavirus.
Refining margins, or cracks, for jet fuel in Singapore slumped to $5.42 per barrel over Dubai crude during Asian trading hours, their lowest since June 30. They were at $5.70 per barrel a day earlier.
Although the pandemic situation in Asia is expected to keep border restrictions intact in the near term, firmer demand from the faster recovering aviation sector in the West currently provides some support to the regional jet fuel market, traders said.
"Easing travel restrictions amid a strong vaccination rollout in Europe have allowed regional flight numbers to almost double from May levels in mid-July," consultancy Energy Aspects said in a monthly note.
"Although rising COVID-19 case numbers will likely slow the momentum, we expect (European) jet demand to remain strong through August."
Asia's jet fuel demand outlook, however, is expected to improve near the end of the year as the vaccinated share of the population grows and seasonal heating demand for kerosene kicks in, market watchers said.
Cash discounts for jet fuel widened to 18 cents per barrel to Singapore quotes, while the Aug/Sept time spread for the aviation fuel in Singapore traded at minus 17 cents per barrel on Tuesday.
OTHER NEWS
- Oil prices steadied on Tuesday as investors bet tight supply and rising vaccination rates will help offset any impact on demand from surging COVID-19 cases worldwide.
- The U.S. Centers for Disease Control and Prevention (CDC) and State Department on Monday both warned against travel to Spain, Portugal, Cyprus and Kyrgyzstan because of a rising number of COVID-19 cases in those countries.
Spain reopened its borders to U.S. tourists in June and has been a popular destination for Americans since then.
(Reporting by Koustav Samanta; Editing by Amy Caren Daniel) ((koustav.samanta@thomsonreuters.com)(+65 6870 3503)(Reuters Messaging: koustav.samanta.thomsonreuters.com@reuters.net))
