Glut of jet fuel, as aviation demand…

Glut of jet fuel, as aviation demand is hugely reduced – land storage facilities nearly full – now storage in tankers at sea
2020-03-23 11:02:00
The world is close to running out of space to store jet fuel that planes do not need, due to the collapse in air travel because of Covid-19 virus.  Only about 20% of land-based storage for the product remains — about 50 million barrels. There is now a shortage of places to keep unwanted jet fuel supplies. Unless oil refineries stop producing jet fuel, this will get worse. The aviation industry normally uses about 7 million barrels of jet fuel per day. Demand is down by about a third now, and could fall by 50% in the next few months. Airlines might be able to store fuel cheaply (perhaps $75 per tonne for two months) and save themselves money in future. It is unclear how much oil refineries have cut production. While land based sites may fill up, tanker ships can be chartered to store jet fuel at sea. However, there is a limit how long it can be stored, due to concerns about oxidation, stability and moisture content, and it degrades much faster than crude oil. Global oil consumption is being reduced by the coronavirus; as well as less air travel, many people are driving less. Refineries may switch to producing more diesel.     Glut of Jet Fuel Is on Brink of Overwhelming Global Storage By Alex Longley, Elizabeth Low, and Jack Wittels  (Bloomberg) 22 March 2020 The world is close to running out of space to store all the fuel that jets are no longer burning. Only about 20% of land-based storage for the product remains — about 50 million barrels — while airlines cut flights, according to Vienna-based consultant JBC Energy GmbH. A collapse in air travel due to the coronavirus pandemic has brought with it a plunge in fuel demand and the threat of a shortage of places to keep unwanted supplies. The picture looks sure to worsen in the coming weeks and months unless oil refineries take drastic action of their own to cut output. Flight cancellations are destroying demand for the roughly 7 million barrels-a-day market, with some traders speculating consumption could have dropped by as much as 50% of that. Dubai-based Emirates, which runs the world’s biggest airline by international traffic, will suspend most passenger flights from March 25, it said Sunday. The product has slumped by more than 60% this year and is trading at around $275 a ton for May supply in northwest Europe. More importantly, perhaps, December prices for jet fuel are at about $350 a ton. In other words, if traders can find a means of storing until the end of the year that costs less than the gap between the two months — around $75 a ton — then they can profit from hoarding supplies. It’s hard to pinpoint exactly when storages would hit tank tops because it’s unclear at this stage precisely how big the hit to aviation demand has been. Also uncertain is the extent to which refineries have already cut production or how much they can do so if required. Storage sites currently dedicated to diesel could be re-purposed for jet fuel — if there’s time and a workforce available to do that. Energy Aspects Ltd.,


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