Asian distillate cracks rise as Europe eases restrictions, air travel picks up

London, (Quantum Commodity Intelligence) - Refining margins for almost all key products improved on Wednesday as a sharp fall in crude was not replicated in the product suite, a dynamic that will have pushed refining margins higher day on day as distillate cracks led the complex higher.

The big mover remained diesel, with 10ppm cracks rising for the 12th day out of 13, with June swaps versus August cash Brent at $6.46/b, up $0.20/b on the day and up 25% on the month.

The driver is mostly the expectations of a return to more normal crack levels as European nations start to ease travel restrictions put in place to curb the spread of Covid-19.

On Monday the UK opened up its airports to international travel and on Wednesday France and Germany have started to ease curfews that have been in place for weeks.

With air travel restrictions easing, jet fuel cracks followed suit, with June swaps versus August cash Brent also up $0.20/b at $4.14/b – only the second time the June crack has breached $4/b since the pandemic began.

The number of flights from 41 European countries, ranging from Iceland to Turkey and Ukraine, hit 81,293 over the week to Sunday, May 16, up 2,070 from a week earlier and also a year high.