The cost of purchasing jet kerosene is continuing to fall despite a slight uptick in crude prices, as demand from airlines dries up completely in some regions.

Energy information provider ICIS assesses that the price of jet kerosene for delivery to northwest Europe is $280.25 per tonne, down from around $650 at the start of the year. Similar price declines were seen in Asian and North American markets.

“European spot jet kerosene prices were seen nearing the lows of 2002 this week with differentials falling further as airlines continue to curb flights, which is pressuring global jet-fuel demand,” notes ICIS – a corporate sibling to Cirium within RELX – in a weekly report dated 24 March.

“Absence of significant trades signalled bearishness in the market further exacerbated by almost no bids and offers for most days in the barges market, while offers outpacing bids in the cargoes market [were] seen during open-market trading window,” it adds.

With storage space for jet fuel limited, the idea of using tankers to hold unsold kerosene – common practice for some crude products – was dismissed because the quality deteriorates when stored for long periods.

ICIS also reports that some refiners are starting to blend their jet fuel into diesel to reduce the excess supply, while others are planning to bring forward refinery maintenance that will reduce their throughput. Because demand has collapsed worldwide, there is little opportunity for traders to take advantage of price arbitrages by shipping jet fuel between regions.

“Even when [travel] restrictions are lifted, the market is likely to remain depressed well into the second half of 2020 due to oversupply,” ICIS highlights. “Oversupply growth is expected to be contained by refinery run cuts and shutdowns to some degree.”