Flight cancellation over coronavirus outbreak causes a fall in Asian jet fuel demand

World Yen Doran 30-Jan-2020

Asian jet fuel demand is directly affected by an outbreak of coronavirus in China, leading airlines to cancel flights during the peak of lunar-new-year travel season.

China’s former rise in demand represented 15 percent of the global oil demand growth over the course of five years.

Jet fuel prices have dropped and refiners’ profits from the product have slumped to the lowest in less than three years.

Lead Asia analyst at Vienna-based consultancy JBC Energy, Kostantsa Rangelova predicts a lower-than-average seasonal uptick for early 2020 given the curtailments on travel, in comparison to the habitual seasonal upside of around 150,000 barrels per day (bpd) ahead of the lunar new year.

Barclays analyst, Singh said that if air-passenger traffic in China were to decline by half in the first quarter of this year, it would likely lead to a decline in demand sizing up to  300,000 barrels-per-day (bpd) in jet kerosene.

Analysts at RBC Capital Markets said that nearly 800 flight departures from the top five biggest Chinese airports cancelled by this past weekend relative to (the previous) weekend, while traffic in the five airports closest to Wuhan have fallen by nearly 50 percent over recent days.

Refinitiv Eikon data showed that refiners’ profits for producing a barrel of jet fuel from Dubai, crude, fell to $9.25 a barrel on Monday, the lowest level since June 2017 and down nearly 40 percent since the start of this year.