Jet crack rally points to renewed optimism for Q3 airline recovery

London, (Quantum Commodity Intelligence) - Refining margins for jet kero rallied on Friday, with spot cracks rising above 2/b for the first time in weeks, according to Quantum data, although they remain under half of typical seasonal levels.

The rise to $2.02/b basis FOB Singapore compares with a spot crack versus June cash Brent of just $0.84/b on Tuesday and reflects a broader move down the curve, where May, June and Q3 cracks rose by a similar amount.

The rise in cracks comes despite what is likely to be a slowdown in air travel in the region as India battles a huge outbreak of Covid that has locked down its capital.

The rise in margins also outpaced that of diesel 10ppm FOB Singapore, with the Q3 jet kero crack versus Q3 10ppm diesel crack rising from -$1.71/b on Tuesday to -$1.31/b on Friday, pointing to renewed expectations of a recovery for the world's airline industry later in the year.

Diesel cracks have been improving this week with the expectation that Malaysian imports could rise over the coming months due to the roll out of new ULSD spec for vehicle transportation.