Imports of jet fuel to northwest Europe and the Mediterranean region reached a five-month low in July, when there was a narrow contango in the forward curve and brimming storage.
Imports of 1.07mn t were down by 41.5pc from June, according to Vortexa. Imports were almost 2mnt in July 2019.
UK imports more than halved to 150,000t from above 450,000t in June. While some European countries started to reopen borders for international travel, the UK government imposed a two-week quarantine policy on arriving passengers on 8 June. Restrictions remain in place for passengers traveling to the UK from a number of European countries, further cutting jet fuel demand during what would normally be the height of the summer season.
The UAE and Kuwait were the largest suppliers of jet fuel to Europe in July, with around 340,000t and 150,000t respectively. Weaker demand in both countries resulted in supply gluts. Saudi Arabia — one of Europe's most important jet fuel suppliers — only exported 90,000t of jet fuel west of Suez in July.
The weakness in the forward curve, following a build-up in storage onshore and offshore, removed any incentive to book jet fuel for storage.
The contango — when prompt prices are below forward values — between front and second-month swaps in the northwest European jet fuel market narrowed to an average $3.5/t during July, down by more than 82pc from its widest of $20/t on 13 May. The contango reached an average $5/t spread between front- and second-month swaps in June.
Three of the cargoes that discharged in Europe in July had been in floating storage for more than a month; one loaded in South Korea in March and spent more than a month off the UK before it discharged in Rotterdam at the beginning of July.
The amount of jet fuel held in floating storage offshore Europe remains high at around 1.1mn t. Jet fuel stocks held independently in the Amsterdam-Rotterdam-Antwerp (ARA) region reached their highest on record, 984,000t, in the week to 23 July.
