| LONDON, Sept 2
LONDON, Sept 2 Spot differentials on jet fuel in
Europe have fallen to a 2011 low this week due to the opening of
the arbitrage window from Asia, the end of the summer holiday
season in Europe and hopes that turmoil in Libya will come to an
end, traders said.
Jet fuel JET-BD-ARA has been sold at premiums as low as
$58 a tonne fob to benchmark ICE gasoil futures LGOc1 this
week in the inland Amsterdam-Rotterdam-Antwerp area. The level
is the lowest since December last year and is a fall from the
July peak of above $90.
Traders cited a range of factors from a spike in expected
inflows to Europe from Asia to the expected eventual end of the
"It is a combination of everything. The arbitrage from Asia
cracked open, holidays are over and benchmark ICE (gasoil) has
strengthened," a trader said.
"Libya is one reason as well. It's all speculation at this
moment but NATO bombing will end eventually and it is moving
towards that way."
In March, premiums on jet fuel shot up to above $95 a tonne
on expectation for increases in demand from fighter jets ahead
of the NATO bombing campaign in Libya. The level was the highest
in 2-1/2 years, or since the collapse of Lehman Brothers in
NATO has not officially ended its air strike campaign
against ousted Libyan leader Muammar Gaddafi. But six months
after the escalation of violent protest into the civil war,
Libya's National Transitional Council (NTC) has assumed the new
leadership and been recognised internationally.
ICE gasoil prices, the benchmark for heating fuel, jet fuel
and diesel, have risen about $56 from early August to about $942
a tonne on Friday due to healthy demand for diesel and an
expected increase in heating oil ahead of winter in Europe.
The rise in ICE gasoil prices pressured jet fuel
differentials, while differentials on diesel and heating have
not fallen as sharply as jet fuel.
Traders also said the spot arbitrage to ship jet fuel from
Asia to Europe opened up following the restart of a refinery in
Taiwan, pulling down European jet fuel differentials.
Some traders said up to 2 million barrels of jet fuel, the
largest volume in about 3-4 months, were expected to arrive in
Europe mostly in late-September and early October. Ship fixtures
are not yet confirmed.
"A lot more people are wiser now as to who is moving what to
Northwest Europe. Lots of people are now offering jet into the
Mediterranean," another trader said.
Late in August, Taiwan's Formosa Petrochemical Corp
restarted one of the three crude distillation units
(CDU) at its 540,000 barrels per day (bpd) refinery after it was
completely shut following a fire at a secondary unit at the end
of July. It may be able to resume oil product exports soon.
The refinery is the fifth largest in Asia and it is larger
than Europe's largest refinery, Royal Dutch Shell's (RDSa.L)
412,000 bpd Pernis plant in the Netherlands.
(Reporting by Ikuko Kurahone and Claire Milhench; editing by