Jet premiums have languished through the previous two summer periods, peaking briefly at $65/mt over the front month ICE gasoil contract in June 2009 and plus $58/mt in June 2010, before falling away to seasonal lows of plus $28.75 in August 2009 and plus $43.50/mt in July 2010.
Poor demand and an oversupplied market, with stocks extending to floating storage, ensured premiums were held in check for two years. That compares with a peak of plus $96.25/mt seen in August 2006, plus $81.50/mt in June 2007 and a record premium of $154/mt set on July 2, 2008, Platts data shows.
With the almost overwhelming stocks consumed through the latter stages of 2010, a recovering market for jet fuel was underlined with a move into backwardation, while premiums passed through a series of year-to-date highs, peaking at $101.50/mt on April 26.
"Until last year, you had a lot of oil floating and differentials were at $50/mt. Now they are at $100/mt," a fourth trader explained, while the Mediterranean saw particular reasons for strength.
"If one region is to improve, it should be the Mediterranean, especially with Libya out," the trader said.
Libya, which continues to struggle with internal discord and NATO-backed air strikes against the incumbent government, did produce up to four 30,000 mt cargoes of jet fuel per month, in a size favored by Mediterranean discharge locations.
With the region a key holiday destination, demand can pick up dramatically.
"The Med has generally been a growing demand center, but logistics are always key -- it's reliant upon smaller parcels. Through the summer, exports drop off, Turkey stops exporting and starts importing, Greece too," the second trader said.
"You basically end up with a situation where the Med can drive up dramatically. That's when you feel [the absence of] Libya. There'll be more excitement in the summer," the trader said.
