Europe jet fuel margin recovery stalls as flight data shows sharp fall

London (Quantum Commodity Intelligence) - Refining margins for jet fuel in Rotterdam dropped sharply lower Tuesday as the third wave of Covid-19 threatens to stall the recovery of the aviation market despite the roll-out of vaccines, Quantum data shows.

Refining margins for jet fuel in Rotterdam have improved over the past two weeks, helped by the closure of the Suez Canal in late March, which delayed imports of jet fuel from the Arab Gulf, as well as by the seasonal uptick in travel in spring.

But with many countries, including France and Italy, reintroducing lockdowns ahead of the Easter break, demand for flying has nose-dived again.

The crack value for FOB jet barges in Rotterdam versus front-month Brent dropped 50 cts/bbl to $2.27/bbl, reversing gains made before the Easter break.

The latest data from Eurocontrol, the Brussel based agency for aviation safety, shows the seven-day moving average for passenger and cargo flights in Europe dropping sharply since the end of March.

On April 6, the seven-day moving average dropped to 64.4% lower than a year earlier, down from 61.8% lower on March 31, and the figures are on course to revert back to February lows when they were 67% lower than a year earlier.

However, the year-on-year comparisons cloud the figure for total demand because aviation demand is weakest in January and February.

There were 74,630 flights in Europe over the seven days to April 6, down 1,391 from the week to March 30, but still 5,473 higher than the flights recorded over the week to April 23, and 13,006 higher than recorded in the week to February 7.

Worldwide airline passenger traffic deteriorated in February year-on-year amid the resurgence of Covid-19, data from the International Air Transport Association (IATA) shows.

February traffic, measured in distance travelled by passengers, was down 74.7% compared to a year earlier, almost the same as the 72.2% year-on-year fall seen in January.

European carriers recorded an 89% decline in passenger traffic in February versus February 2019, substantially worse than the 83.4% decline in January compared to the same month in 2019.