US jet fuel glut is too big for surging air travel to drain

The US is swimming in so much jet fuel that even this summer’s surge in air travel can’t save the market. Air traffic in the US has jumped to more than 2m passengers a day, about 78% of where it was in the summer of 2019, according to the TSA. That’s done little to diminish the massive glut in jet fuel stockpiles, which stand at their highest seasonal level in a decade. Part of the problem is that refiners are trying to cash in on resurgent gasoline demand by raising production rates, which indirectly leads to more jet fuel output. The global oil market can’t fully recover to pre-pandemic levels until jet fuel consumption is back to normal. The US has one barrel of jet fuel for every three barrels of diesel and every five barrels of gasoline in inventory, Energy Information Administration figures show, leaving the aviation sector exerting considerable influence on how much refiners can process. “Traffic data is a false flag for the jet fuel market,” said Zachary Rogers, director of global oil service at Rapidan Energy Group. “The real metric is the quantity of international flights, which at this point has barely recovered, and there are looming headwinds.” The best indicator of the market mismatch is the widening gap between jet fuel and diesel. Typically the two products trade within a nickel of each other but currently physical jet fuel is 18 cents a gallon less in the US Gulf Coast refining hub. Most analysts say a 10c spread would point to the beginning of a recovery in jet fuel markets. “Meeting gasoline demand meant swamping the market with jet fuel, which bled into the diesel pool, as refiners can only minimize middle distillate supplies to a certain extent,” said Linda Giesecke, manager of global fuels at ESAI Energy.<br/>