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Jet fuel prices soar 15% in a week

5-Jun-2009

The prospects of a financial recovery in the airline sector have taken a major hit in the past week with a 15% surge in spot prices around the world - outstripping the big increases in crude prices. Crude set a new high for the year overnight, closing up over 4% to USD68.81 per barrel in New York, having reached USD69.60 earlier in the day.

IATA is now likely to widen airline industry loss forecasts for the year. IATA observed, "oil and jet fuel prices are rising, despite weak oil market", inferring speculators are again pushing the prices higher. The industry body stated, "oil demand is down 3% on last year and OECD stocks have risen to a 16 year high of over 62 days forward cover".

Jet fuel spot prices soared 15.9% in New York (in the week to 02-Jun-09), +16.3% at the US Gulf Coast, +15.6% in Los Angeles, +15.2% in Amsterdam and +12.7% in Singapore. Jet fuel prices are still down around 53-54% year-on-year, and crude prices are down 46.3%. This gap has narrowed substantially in the past week. IATA stated the ‘crack spread' has compressed to 12-15%, due to excess refinery capacity.

Even with the spike in fuel prices, few airlines can contemplate passing on higher fuel costs in the form of increased surcharges or fares as demand remains weak. For example, Korean Air deferred plans to increase fares on international operations by up to 15% from 01-Jun-2009, due to slowing international traffic.

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): 26-May-09 to 02-Jun-09

 

26-May-09

27-May-09

28-May-09

29-May-09

01-Jun-09

02-Jun-09

one week
Change

12 month
Change

New York Harbor

156.8

157.8

163.17

169.23

177.5

181.75

15.9%

-52.6%

U.S. Gulf Coast

153.42

154.41

159.17

167.23

174.5

178.5

16.3%

-53.1%

Los Angeles

160.92

162.91

167.17

173.48

181.5

186

15.6%

-52.9%

Amsterdam-Rotterdam-Antwerp

158.02

158.63

165.28

171.62

179.4

182.05

15.2%

-53.9%

Singapore

155.12

159.17

159.4

165.19

172.38

174.76

12.7%

-54.2%

WTI Spot

62.48

63.41

65.09

66.31

68.59

68.58

9.8%

-46.3%

Daily jet fuel prices (kerosene, cents per gallon) at New York, US Gulf Coast, Los Angeles, Amsterdam, Singapore: 02-Dec-08 to 02-Jun-09


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