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Oil pushing higher still

9-Apr-2010

Crude oil prices had another strong week, pushing the cost of oil to an 18-month high above USD87 per barrel early in the week, before softening slightly in trading over the past few days. The increasing price of oil over Mar-2010 has prompted IATA to push up its estimate for average 2010 oil prices to USD86.30 per barrel, which would add USD14 billion to global airline fuel costs for the year.

US online travel agent, Travelocity, reported yesterday that US airfares for the peak Summer period have returned to 2008 levels, with domestic fares up 9% and international fares up 10%.

With returning traffic levels and “pent up demand”, airlines now have more leeway to increase fares to pass on the oil price increases to passengers. As oil prices stay well above USD80 per barrel, returning to fuel surcharges is also an increasing temptation for airlines. However, heavy competition and the delicate state of the economic recovery may dampen previous enthusiasm for surcharges in the near term.

Is USD90 per barrel too far off?

Oil prices ended the week to 06-Apr-2010 at US86.54 per barrel, the first time since Oct-2008 they have spent any time consistently above USD85 per barrel. Prices are now almost 70% higher than they were this time in Apr-2009, when they were hovering in high-USD40 per barrel range.

WTI spot price: Feb-2009 to Feb-2010

Jet fuel prices (cents per gallon) rose significantly, up more than 6% in all exchanges. New York Harbour, US Gulf Coast and Los Angeles prices gained 6.1%, 6.2% and 6.5% respectively. Amsterdam prices gained 7.5%, while Singapore prices rose 8.3%.

Daily jet fuel prices (kerosene, cents per gallon) at New York, US Gulf Coast, Los Angeles, Amsterdam, Singapore: Aug-2009 to Apr-2010

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): 29-Mar-2010 to 06-Apr-2010

 

29-Mar-10

30-Mar-10

31-Mar-10

01-Apr-10

05-Apr-10

06-Apr-10

one week Change

12 month Change

New York Harbor

219.47

220.22

223.57

229.39

233.25

232.93

6.1%

59.2%

U.S. Gulf Coast

214.69

215.22

218.82

223.89

229

227.93

6.2%

59.8%

Los Angeles

218.69

218.22

222.32

227.89

232.75

232.93

6.5%

57.0%

Amsterdam-Rotterdam-Antwerp

216.19

216.49

219.81

226.84

 

232.35

7.5%

56.8%

Singapore

209.64

212.14

213.45

216.07

222.5

227.02

8.3%

54.0%

WTI Spot*

81.92

82.14

83.45

84.53

86.36

86.54

5.6%

69.4%


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