Jet fuel refinery margins have come under pressure due to the suspension of flights globally over the coronavirus outbreak. However, it may be even more beaten up in coming months as more passengers cancel their flights.
The Asian jet fuel market has endured unexpected losses this year which prompted global airlines to suspend flights and affect millions of people’s travel plans.
The drop in fuel caused Singapore jet fuel prices to lose more than 30% from the January-February 2020 period. This also resulted to a collapse in JETSGCKMc1 by more than 50%.
Sri Paravaikkarasu, director for Asia oil at consultancy FGE said that the virus’ impact on jet fuel demand in Asia is estimated to extend for a few more months.
He added that the decline in demand was unexpected ever since the global financial crisis.
As the virus spread to over 60 countries, more flight suspensions are expected as people avoid travelling amid the epidemic.
The virus’ impact on jet fuel demand is expected to be bigger in comparison to other fuels because of many flight cancellations.
Asia’s jet fuel demand dropped by 740,000 bpd in February compared to the same period last year. It is expected to be 620,000 bpd lower in March, according to analyst estimates.
Jet fuel cracks for aviation declined to its deepest since 2009 at $6.04 per barrel over Dubai crude last week. It is currently at its lowest levels in seasonal March in nearly 10 years.