Extreme volatility triggered by the war in the Mideast Gulf has collapsed price visibility in the European jet fuel market, leaving participants unable to agree on price levels, traders told Argus at Thursday's close.
"No one knows" what level to trade jet fuel in Europe because the paper market is moving too quickly, one European trader said. Another described the market as "stupidly wild" and "incredibly unclear".
Two traders said over-the-counter liquidity still appears robust, but bid-offer ranges had blown out, creating large intraday discrepancies in swap values. Argus received March jet swap indications between $280/t and $450/t on Thursday.
Argus assessed the March swap at a $330/t premium to front-month Ice gasoil futures, up by $50/t from the previous close, based on market indications. Jet swaps have been breaking records since Tuesday.
Several other jet spreads are also at all-time highs. Jet fuel is trading at more than twice the price of Ice Brent and over $20/bl above diesel.
The conflict is threatening supply routes and disrupting tanker movements, putting up to 50pc of European jet supply at risk. Even so, traders say jet values have broken away from fundamentals, with many describing the market as "crazy".
