MOSCOW (MRC) -- Global jet fuel markets stayed under pressure on Tuesday as more countries expanded border restrictions to keep the new Omicron coronavirus variant at bay, prompting travelers to reconsider their plans, reported Reuters.
Jet fuel demand - the biggest laggard in the oil complex - had been forecast to post the strongest growth of 550,000 bpd to 5.9 MMbpd in fourth quarter, according to the International Energy Agency in its Nov. 16 report.
But now Omicron poses the greatest risk to jet fuel consumption. Hong Kong expanded a ban on entry for non-residents from several countries, the latest to expand travel curbs after Israel and Japan have already announced border closures to all foreign travelers.
Britain and Australia have tightened rules for all arrivals in response to the new variant while hundreds and thousands of would-be travelers are now considering to cancel or delay their trips in response to renewed restrictions.
"The real risk from the new variant is ... the reimposition of more widespread flight restrictions during the winter and again reducing current global jet fuel demand of some 6 MMbpd significantly," energy consultancy FGE said in a note.
Asian refining margins for jet fuel slumped to their lowest in more that two months on Monday at USD6.92 a bbl, while the front-month time spread for the aviation fuel in Singapore flipped to a contango for the first time since end-September.
"Current jet demand levels are just 1 MMbpd above last winter, when cases and hospitalizations were far higher and before any widespread vaccinations," Goldman Sachs analysts said in a Nov. 26 note.
"While a worst case outcome could be a return to last winter's levels, 0.5 MMbpd downside to our current base-case until 2Q22 would be a conservative assumption given what we know at present."
As MRC informed earlier, the Omicron coronavirus variant kicked oil prices lower late last week and has sapped refining margins, but with crude futures rallying on Monday, the impact could be limited. Oil prices plunged more than 10% on Friday - their largest daily drop since April 2020 - but recovered some of those losses on Monday, standing up nearly 5% on the day. Analysts said the Friday sell-off had been excessive. Refining margins fell further, increasing the impact of new coronavirus curbs that had already been rolled out in Europe.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia"s estimated PE consumption totalled 1,868,160 tonnes in the first nine months of 2021, up by 18% year on year. Shipments of all grades of ethylene polymers increased. At the same time, PP shipments to the Russian market were 1,138,510 tonnes in January-September 2021, up by 30% year on year. Supply of propylene homopolymer (homopolymer PP) and block-copolymers of propylene (PP block copolymers) increased, whereas supply of injection moulding statistical copolymers of propylene (PP random copolymers) decreased significantly.
MRC