Jet floating storage takes off in northwest Europe

Jet fuel has overtaken gasoline and diesel to become the dominant clean oil product in floating storage in northwest Europe.

Just over 1.1mn t of jet fuel is currently floating in storage off northwest Europe, up from around 700,000t in the middle of July and around 450,000t on 23 June, according to Argus analysis and data from Vortexa. It is now roughly equivalent to the amount of gasoline and diesel in floating storage combined. As of yesterday, approximately 565,000t of gasoline was being stored offshore northwest Europe, down from 725,000t in the middle of July and nearly 900,000t at the end of June. Diesel in floating storage stands at around 600,000t, compared with over 1mn t in the middle of last month and around 780,000t at the end of June.

Floating stocks of jet fuel have built rapidly in recent weeks as what should be the peak summer demand season fails to materialise. European air travel is recovering from Covid-19 restrictions at a slow pace. Road fuel demand in Europe has benefited from the lack of international air travel, although consumption remains sluggish and varies regionally. The reimposition of travel bans and regional lockdowns in several European countries mean fewer driving holidays this summer than might have been expected.

Gasoline in floating storage has actually started edging back up again, from around 450,000t last week. A small $4/t contango between front and second-month Eurobob swap contracts is just about enough to keep product in tank. Some market participants have been talking about rolling summer-grade gasoline into next year, with the European market switching to cheaper winter specifications in September. Second-quarter 2021 Eurobob swaps were priced around $440/t yesterday, as much as $50/t above the August swap.

By George King Cassell