After a long period of the price weakness across Arabian Gulf market, the jet fuel market has started to recover since the first quarter of 2015. This will in turn reflect on the European market with a steady supply from the Middle East moving towards Europe. Therefore, NWE and ARA regions are going to become well-stocked – a very positive situation in a slowly accelerating market.
Since the beginning of 2015 there has been an increased flow from both the Arabian Gulf and Russia to the ARA region, for instance, Scandinavia started to absorb more of its requirements from Russia. Also, in mid-April, 130’000 MT of jet fuel was loaded in the Arabian Gulf and delivered to NWE. However, even with new barrels still arriving to both NWE and ARA regions, the demand remains on the average level without withdrawing stocks and the spot activity is limited.
By end of April there was a draw of 60,000 jet barrels per week in ARA region. The barrels then moved north and were exported to the south of MED. In the beginning of May 2015, there were high inventory levels across Europe and healthy refinery margins continued to support high utilization rates in the region. Despite the draw, jet inventories in the NWE remained strong and largely stable with stocks up 73.2% higher than last year.
There were no immediate opportunities to re-export out of Europe, and it is expected that new shipments will continue to be delivered to Europe. For instance, be 80,000 MT of jet fuel was exported from Yanbu at the end of May. Meanwhile, another shipment of 90’000 MT of jet fuel was delivered to Europe from the Arabian Gulf in June.
There remains a lot of shipments out of the Arabian Gulf to Europe and more coming from Russia. Therefore, we can predict that Europe is moving towards a floating market with a huge drop in the Jet fuel prices.