NWE jet cracks down 12% on week, spread into August widens

London, (Quantum Commodity Intelligence) - Refining margins at the front of the curve for jet fuel in northwest Europe moved lower Tuesday, as underlying Brent futures made another day of gains and hopes of a resurgence in air passenger numbers in both hemispheres continued to falter, with the European move tracking a similar change in Asian markets.

The June swap for jet fuel CIF NWE dropped $0.31/b to $4.92/b, while July fell $0.28/b to $5.66/b, according to Quantum data.

The crack for the front-month jet CIF NWE swap has now fallen 11.6% on the week, erasing some of the gains made in recent weeks, but still far above a low of $1.89/b at the end of March when lockdowns in many countries were still at a peak and air travel was more severely curtailed.

The structure between the June and July crack values has remained around a -$0.70/b contango throughout the last 10 days, but the July vs August spread has widened, reaching -$0.81/b up from -$0.72/b, indicating that the market expects balances to be tighter later in the summer.

Other distillates cracks curves were also lower on the day, largely tracking moves in low-sulfur gasoil futures.

Gasoline cracks also took a hit at the front of the swaps curve though, while the remainder of the curve past the summer driving season traded just marginally lower.

June, July and August Eurobob E5 gasoline barge cracks dropped $0.25/b, $0.19/b and $0.10/b on the day to $9.42/b, $9.69/b and $9.57/b respectively.

Fuel oil cracks also saw a rare move higher after taking a hammering in the last few weeks, as high-sulfur fuel oil barges FOB ARA June and July margins both moved $0.2/b higher to -$12.33/b and -$11.98/b respectively.