Jet fuel market strongest in years as frozen Asia needs heating

Asia’s icy winter just spawned Europe’s strongest jet fuel market in over three years. The fuel’s premium to diesel, the most-watched measure of market strength, jumped to $2.59 a barrel in Europe on Friday, the highest since December 2014. Freezing weather in Asia is drawing cargoes of kerosene, which is almost identical to jet fuel, from Middle East refineries that were already producing less than normal due to maintenance. That, in turn, is poised to chop shipments to Europe by about a third this month, according to tanker tracking data compiled by Bloomberg. “Asia has been drawing high supplies lately because of unusually cold weather,” said Ehsan Ul-Haq, director of crude oil and refined products at Resource Economist Ltd. in London. “This leads to the airlines in Europe fighting for the same barrel as the people in Asia, who are struggling to heat their homes.” In outright terms, jet fuel actually weakened sharply over the past few weeks because, like every other petroleum product, it tracks crude. And Brent futures slumped between late January and early February. Traders tend to watch jet fuel’s price relative to diesel because refineries can sometimes tweak their operations to switch between the two, and diesel is the more widely traded, making it a key benchmark. The jet fuel market isn’t only being driven by cold weather. Air passenger traffic in Europe grew 8% in 2017, the fastest expansion in six years, according to a preliminary estimate from the IATA.<br/>