By Ann Koh
June 8 (Bloomberg) -- Jet fuel in Asia traded at the biggest discount to gasoil in a year because of reduced demand from airlines, a sign that refiners may cut output of the transport fuel.
Spot jet fuel’s difference to gasoil, known as the regrade, fell to minus $2.05 a barrel in Singapore on June 3, the most since June 30, 2008, according to data compiled Bloomberg. Jet fuel has been at a discount all this month. The spread was at minus $1.80 on June 5.
“There’s not much incentive to be producing jet fuel,” Victor Shum, a senior principal at energy consultant Purvin & Gertz Inc., said in Singapore. “The economy is bad, planes aren’t full.”
Airlines lost as much as $8.5 billion in 2008 as the global recession curbed travel, according to the International Air Transport Association, whose 230 members account for 93 percent of scheduled international air traffic. The reduced demand for air travel pushed Cathay Pacific Airways Ltd. into the red last year and prompted Qantas Airways Ltd. to forecast a record loss.
Benchmark Asian gasoil, also known as high-sulfur gasoil, closed at $75.15 a barrel while jet fuel was at $73.35 a barrel in Singapore on June 5, according to Bloomberg data.
To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net
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