Physical barrels a-plenty were available in the Northwest European jet fuel market Wednesday, according to market sources, although it was suggested that perhaps availability of EU-qualified product was markedly less so.
However, one source suggested the NWE jet cargo market looked balanced at the front, with more arrivals expected for August. "But the problem is a large proportion of non-EU product, so we could see a two-tier market," he said. "Ultimately one would expect to see the market under pressure, but whether this goes into the headline number or the non-EU discounts is hard to predict," he added.
Another source suggested the market felt as though players were possibly reluctant to trade non-EU product, adding that the market was easy to argue from either a bullish or bearish perspective. "The [arbitrage into NWE from the] Persian Gulf been looking good for the last few days, although the regrade has got a bit stronger today which has narrowed that," said a third source, while another added: "Freight rates are still pricey though, and the market is thin."
Another source agreed that some arbs looked favorable into NWE. "There was a lot of airline hedging hitting the market today after yesterday's flat price dump so the arbs do look open from both centers," he said, adding: "There was not a massive effect by any means. It just means the banks have come in to buy paper and therefore values have strengthened today...especially calendar 2009."
Overall, flat NWE cargo jet prices eased to $1,361.50/mt Wednesday.
18-Jul-08