Asia Distillates-Jet fuel cracks slip as coronavirus hammers aviation demand
SINGAPORE (Reuters) - Asian refining margins for jet fuel crawled lower on Thursday, lingering close to a more-than-10-year low touched last week, as the regional aviation sector continued to get hammered amid the coronavirus outbreak. Refining margins, also known as cracks, for jet fuel inched down to $6.79 per barrel over Dubai crude during Asian trade on Thursday, 2 cents lower from a day earlier.
The cracks hit $6.04 a barrel last Thursday, the lowest since mid-2009. The jet fuel market, which has already suffered unprecedented losses this year due to the virus, is expected to come under further pressure in coming months as global airlines suspend more flights and more passengers cancel travel plans due to the spreading outbreak. Passenger traffic for Asia-Pacific airlines in January climbed 2.5% on-year, the slowest growth since early 2013, the International Air Transport Association (IATA) said in statement on Wednesday. "January was just the tip of the iceberg in terms of the traffic impact we are seeing owing to the Covid-19 outbreak, given that major travel restrictions in China did not begin until Jan. 23. Nevertheless, it was still enough to cause our slowest traffic growth in nearly a decade," IATA Chief Executive Alexandre de Juniac said.
Meanwhile, air cargo demand for Asia-Pacific airlines decreased 5.9% in January year-on-year, the IATA said, adding the impact from coronavirus is expected to affect February's performance. Cash discounts for jet fuel <JET-SIN-DIF> were at 20 cents per barrel to Singapore quotes on Thursday, compared with a discount of 32 cents per barrel on Wednesday. Cash differentials for 10 ppm gasoil <GO10-SIN-DIF> flipped into a discount of 8 cents per barrel to Singapore quotes on Thursday, compared with a narrow premium of 2 cents per barrel in the previous session. Refining margins for gasoil with 10 ppm sulphur content fell to $8.98 per barrel over Dubai crude on Thursday, down from $9.03 per barrel on Wednesday.
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