Chinese flight activity has more than tripled since early December to more than an average of 10,700 flights per day, according to data from flight tracking firm Airportia. Jet fuel this year will be the largest source of oil demand growth, says the International Energy Agency, which monitors energy consumption.
This month’s demand should hit 6.6 million barrels per day, the highest reading since February 2020, said Viktor Katona, an analyst at data firm Kpler.
Prices are climbing in Asia, Europe and the United States. In Singapore, jet fuel is trading around $122.30 per barrel, up 14% in the last two weeks. Europe’s price for the fuel has climbed to $115 per tonne, the highest since June. New York spot prices were quoted on Thursday at $2.45 above U.S. ultra-low sulfur diesel , a premium not seen at this time of the year since at least 2011.
Refining outages in the United States are feeding the price run-up. Cold weather along the U.S. Gulf Coast recently knocked out some processing plants and pushed up the premium for jet fuel, said Gary Simmons, chief commercial officer at Valero Energy.
“Overall, we expect jet demand to increase significantly this year,” he told an earnings call on Thursday, as air travel continues to rise. U.S. East Coast supplies are likely to remain scarce until mid-February, he said.
A Feb. 5 European Union embargo on imports of seaborne Russian refined products will also pressure European supplies and will increase the call on U.S. refiners to fill the gap, analysts said.
U.S. jet fuel inventories ended last year at 34 million barrels, the lowest since 1990, according to U.S. government data. Total jet fuel supplied, a proxy for demand, stood at 1.56 million barrels per day in 2022, the highest since 2019.