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NWE jet fuel cargoes reach 32-month high, following barge strength

London (Platts)--2Nov2017/956 am EDT/1356 GMT


CIF Northwest European jet fuel pricing differentials for cargoes reached a 32-month high Wednesday as regional stocks declined, according to S&P Global Platts data.

S&P Global Platts assessed the price differentials for the jet fuel CIF cargoes in Northwest Europe at a $38/mt premium to low sulfur gasoil futures.

The assessment followed the path of the FOB Rotterdam barge differential, which reached a 32-month high Monday and continued to strengthen to a 34-month high Wednesday.

Jet fuel stocks have declined in the region despite high arrivals of cargoes, which have been absorbed by steady demand.

Barges of jet fuel have been in high demand amid reduced stocks and the turnaround season in Northwest Europe.

In recent weeks barges have been preferred over cargoes as the backwardation deterred players from buying cargoes to prevent volumes going into storage, choosing instead to buy barges to meet demand.

This led to a premium of $8.75/mt for barges over cargoes Wednesday, a five-year high for the spread.

The strength on barges has since filtered through to cargoes, which although less attractive in backwardation have followed the strength in barges.

Once the spread reaches a point, buying cargoes to break into barges becomes economical, eventually narrowing the spread as cargo demand increases and barge supply increases.

--Christopher Ewen, christopher.ewen@spglobal.com
--Edited by Jonathan Fox, jonathan.fox@spglobal.com

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