Asian jet cracks slip, track Europe lower as airlines trim June flight schedule

London, (Quantum Commodity Intelligence) – Asian refining margins for spot jet fuel fell sharply Friday, tracking European cracks lower after budget airlines warned the UK government against clamping down on holiday travel over fears of new variants of Covid spreading and scrapped many flights scheduled for June.

The spot jet crack versus cash Brent fell from $3.33/b on Thursday to $2.73/b on Friday, as cash differentials slumped on sluggish spot demand due to lower European prices.

Spot jet fuel traded at a $0.50 discount to underlying swaps on Friday compared with an assessed value at a $0.30 discount a day earlier.

There has been a rising flow of jet fuel from Asia to Europe in recent weeks as higher vaccination rates allow for European countries to unlock travel curbs while southeast Asian nations battle to stem rising infections, albeit from a very low level.

European jet cracks slipped $0.17/b on Thursday to $4.57/b with July and August falling by a similar amount.

Early indications showed they flatlined by 0930 Singapore time.

Jet cracks had been in an upward trend since March.

On Thursday, the UK government removed Portugal from a so-called safer list of holiday destinations that Britons can go to without quarantining on their return, effectively placing some form of quarantine on all popular holiday destinations for the foreseeable future, despite relatively low infection rates.

That caused Jet2 to cancel all flights for June, while Easyjet has cancelled bookings to popular holiday destinations for the rest of the month and package holiday specialist has cancelled flights to most European countries for June.