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Friday Fuel Watch - Airlines still paying a hefty premium for jet fuel

30-Jan-2009
  • Jet fuel prices eased around 5% in week ended 27-Jan-09;
  • Over the past 12 months, jet fuel prices are down 45-48%, whereas the spot price of oil (WTI) has fallen almost 54%.

Jet fuel spot prices eased 3% in New York and the US Gulf Coast in the week ended 27-Jan-09, but rose 1% in Singapore and 3.6% in Los Angeles. Spot prices fell 0.6% in Amsterdam. This compares to an 8% increase in crude prices (WTI) last week.

Even so, the gap between reductions in jet fuel prices and crude oil prices is still of concern to airlines. Over the past 12 months, jet fuel prices are down 45-48%, whereas the spot price of oil (WTI) has fallen almost 54%.

Daily jet fuel prices (kerosene, cents per gallon) at New York, US Gulf Coast, Los Angeles, Amsterdam, Singapore vs Crude Spot price (WTI, USD per barrel): 20-Jan-09 to 27-Jan-09

 

20-Jan-09

21-Jan-09

22-Jan-09

23-Jan-09

26-Jan-09

27-Jan-09

one week
Change

12 month
Change

New York Harbor

145.8

145.1

139.7

148.3

144.8

141.1

-3.2%

-45.9%

U.S. Gulf Coast

139.8

139.6

131.2

140.9

139.8

135.7

-2.9%

-47.1%

Los Angeles

133.3

135.6

131.0

143.0

141.8

138.0

3.6%

-46.2%

Amsterdam-Rotterdam-Antwerp (ARA)

136.0

136.0

132.3

140.0

139.7

135.3

-0.6%

-48.5%

Singapore

133.5

133.6

135.7

132.9

133.0

134.8

1.0%

-45.4%

WTI Spot

38.6

42.6

42.3

45.1

46.5

41.7

8.0%

-53.9%

Daily jet fuel prices (kerosene, cents per gallon) at New York, US Gulf Coast, Los Angeles, Amsterdam, Singapore: 27-Oct-08 to 27-Jan-09

Crack spread

In its latest airline ‘Financial Health' report, IATA this week stated that the ‘crack spread' (between crude and refined prices) has widened to 40-50% recently from the normal 25%. There may be a positive side to this: IATA added if crude prices do rise in coming months, "then the upside for jet fuel prices may not be so high".

Futures markets are currently betting spot prices will be USD12 per barrel higher in 12 months time.

The next Friday Fuel Watch will be on 06-Feb-09. The potential narrowing in the crack spread will be watched closely.


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