European jet imports rise on month; market outlook bearish

Jet fuel inflows from the East of Suez into Europe rose 100,000 metric tons on the month to 1.8 million mt in August, according to S&P Global Commodities at Sea(opens in a new tab) shipping data from Aug. 16.

"As diesel remains weak, refineries have maximized jet fuel locally and globally, and Europe is a high price center so all the Far East and AG oil flows are now coming into Europe," said a source.

Jet fuel differentials have dropped to a four-month low as supply remains strong. Platts assessed the Jet CIF NWE differential on Aug. 16 at a $39.25/mt premium to the ICE LSGO futures contract.

"Aviation demand is good but not great: there have been aircraft delivery issues, so most airlines are having capacity issues which means less passengers; so, winter is looking a bit bearish, and I doubt demand will go beyond 2019 levels this year," said a source.

Although global air travel measured by flights returned to pre-coronavirus pandemic levels for the first time in mid-2023, jet fuel demand has not kept pace. So far, global jet fuel demand in 2024 remains around 95% of the 2019 levels due to supply chain issues, efficiency gains, larger planes and a slower rebound in more fuel-intensive long-haul travel.

Rise in flows from US, India

The arb from the US Gulf Coast to Europe, which has been shut since April as the US saw rising domestic demand, has now opened, with Europe expected to receive 44,000 mt in Aug.

"Weakness is being seen in the US and they've got too much oil so they're sending barrels over to Europe. The Far East is also exporting more than what Europe requires," said the source.

South Korea is exporting 146,500 mt to Europe in August, while there has been a marked absence of flows from China so far.

Flows from India, a primarily export market for jet fuel, have nearly doubled on the month to 584,000 mt in August.

India's demand for co-distillate aviation turbine fuel edged 2.83% higher on the month to 727,000 mt (b/d) in July, bringing total consumption over the first seven months of the year to 5.1 million mt or 10.59% higher than the same period a year ago, latest provisional data from the Petroleum Planning and Analysis Cell showed.

India's domestic airlines carried 13.2 million passengers in June, representing a 5.76% increase on the month, according to the latest data from India's Directorate General of Civil Aviation. This brings total passengers carried over the six months to 79.3 million passengers, 4.28% higher from the same period a year ago. Data for July has yet to be released.

Going forward, the South Asian middle distillate market is expected to remain at a surplus in the third quarter of 2024 compared with last year, S&P Global Commodity Insights analysts said in their latest outlook.

"[South Asian] jet fuel/kerosene demand is anticipated to increase to 19,000 b/d, with production only growing by 18,000 b/d," they said.

Surge in flows into NWE

The bulk of imports in August are into Northwest Europe, with the Netherlands taking 645,900 mt in August, up 300% on the month, while France and the UK have seen a drop in imports to 146,200 mt and 617,000 mt, respectively.

Reflecting the strong inflows, jet fuel and kerosene inventories in the Amsterdam-Rotterdam-Antwerp refining hub rose 29,000 mt to 911,000 mt in the week to Aug. 15, data from market research company Insights Global showed.

The stocks were 27.6% higher than the year-ago week.

However, "ARA tanks have been nearly empty, and that's normal in this peak season," said the trade source. The weekly rise is "just a wave" as cargoes come in, and there will be more of a build in early September as the summer flying season comes to an end.