October 20, 2014
A lack of spot offers in the Northwest European jet cargo market Monday and sustained strong buying appetite saw premiums for delivered CIF cargoes climb to $83/mt.
"I do not think there is much oil [jet] around. There are several buyers looking for offers, but I have not seen any offers looking for buyers," one source said.
The legacy of strong summer demand across Europe had delayed stock building until September, the source said, adding that storage that had built since was now beginning to be drawn out of tank to meet prompt shorts, with cargoes heard to have discharged into Ghent and Immingham from Rotterdam in recent days.
CEPS pipeline operations at Rotterdam were heard to have resumed Monday after a two-week closure that had seen some volumes redirected through Ghent.
Prompt tightness saw the backwardated market structure for cargoes more than double from Friday to a 24 cents/day structure, after balance-month swap differentials to front-month 0.1% ICE gasoil futures closed $2.75/mt higher at $81.25/mt.
In the Northwest European barge market, KLM was seen offering volume in an otherwise quiet offering over the day, despite interest from a number of buyers heard looking for volumes, sources said.
End-user demand for kerosene was also heard to have picked-up, responding to lower outright prices.
EU to ban exports to Syria
EU foreign ministers on Monday agreed to impose an export ban on jet fuel and relevant additives to Syria as part of a wider package of new sanctions against the regime of President Bashar al-Assad.
The sanctions were agreed at a meeting of EU foreign ministers in Luxembourg.
"As the Assad regime continues its brutal war against its own people, the Council today reinforced EU restrictive measures against the Syrian regime," it said in a statement.
It said that the ban on the supply of jet fuel to Syria was because it was being used for "indiscriminate air attacks against civilians."
In addition to the ban, the Council said sanctions had been imposed against 14 people over their responsibility for the "violent repression of the civilian population."
Two more individuals and two entities providing practical support to the Syrian regime will also be subject to the restrictions, which consist in an asset freeze and, for the individuals listed, a travel ban, it said.
The decision brings the total of individuals subject to EU sanctions against the Syrian regime to 211 and the number of entities to 63.
The legal acts, including the names of the designated persons and entities, will be published in the EU Official Journal on Tuesday and will enter into force at the same time.
EU sanctions imposed in September 2011 already banned the import by EU member states of Syrian crude.
They also banned companies from investing in the sector.
The US had led the way on oil sanctions against Syria in August 2011, with President Barack Obama signing an executive order banning all dealings, including investment, by US citizens with the country's oil sector.
Syrian oil exports to the EU had been running at around 150,000 b/d with overall production seen at around 350,000 b/d before 2011.
Mild Japanese winter forecasted
Japanese refineries have been increasing their capacity for storage of kerosene this year in preparation for winter following some refinery closures at the end of March, despite early signs pointing to a mild winter.
"The weatherman has so far forecast a mild winter," a trader based in Singapore said Monday.
However, with prompt supply of jet fuel limited in Europe and the US, this has had a hand in improving the outlook for the product.
"Jet is looking tight globally," an industry source said, attributing the tightness to refinery run cuts as well as seasonal factors. The Asian jet/kerosene price was assessed at $100.46/barrel Monday, up from $99.43/b on Friday and up $3.49 from Thursday. The physical jet fuel/Dubai crack continues to hover above the $14/b mark, but is off the $16/b highs seen in late September.