The continued slide in the ICE gasoil futures contract Monday brought European jet cargo prices to a 7-month low.
CIF Northwest European cargo prices fell by $2.75/mt Monday to be valued at $963/mt, the lowest they have been since February 18 when Platts assessed the European cargo market at $951.50/mt, Platts data shows.
The drop occurred despite a recovery in the CIF NWE cargo premium, which gained $3.75/mt on Monday to be assessed at $71.25/mt above the front-month ICE gasoil contract.
Sources anticipated the recovery in premiums on Monday, stating that the market should be responding to bullish news on refinery closures, poor margins and concerns about supply going in to the winter kerosene season.
"We're entering a bit of an up-period right now," a European middle distillates trader said. "With refining margins so poor, even for complex refineries, we should expect to see bullish signs for differentials."
European jet differentials are assessed at a premium to the ICE gasoil futures contract, and changes in the ICE gasoil market can have significant effects on the European jet market.
However, the drop in value in the ICE gasoil contract over the last several days, the slight recovery in jet premiums is demonstrative of the fundamentals of the jet market, sources said Monday.
"ICE gasoil strengthening has had a bearish effect on product spreads," the source added. "However, there's not a lot in tank right now, even with ICE gasoil coming down, people are prepared to pay for jet."
