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Tokyo Olympics boosts ANA's summer international passenger demand by 128% on year


Jet fuel had boost from Olympics for refueling demand in Japan

Firm demand draws jet fuel barrels from Northeast Asia to US/Europe

FOB Singapore jet fuel/kerosene cash differential in positive territory Aug 16

Jet fuel demand recovery supports Japan refinery runs

  • Author
  • Takeo Kumagai    Ng Jing Zhi
  • Editor
  • Agamoni Ghosh
  • Commodity
  • Oil
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  • United States

Japan's top airline All Nippon Airways said Aug. 16 that its international passenger demand surged by 127.8% year on year during the country's peak summer holiday season over Aug. 6-15 by taking in incremental demand from the Tokyo Olympics, supporting the regional jet fuel demand.

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ANA said its number of international passengers jumped to 26,988 during the 10-day period, up 127.8% from 11,845 in the same period a year ago as it has taken in the Olympics related demand.

"The delegates and athletes will need to fly home and this would increase the number of chartered flights and thus increasing demand for jet fuel," a source with a Japanese refiner said Aug 16.

Inbound flights carrying the various representatives from respective countries for the Tokyo Olympics would have to refuel in Japan and thus boosting demand for aviation fuels, said another source with a South Korean refiner.

Similarly Japan Airlines said Aug. 16 that its number of international passengers boosted 200.7% year on year to 25,862 over Aug. 6-15 on the back of increased demand for transits.

The Japanese airlines' increased international passenger demand came at a time when the regional jet fuel market started to see a rebound in air traffic activities from the West, particularly in the US and Europe.

Market sources said that the gradual reopening in those two key regions have led to increase flow of jet fuel barrels from Northeast Asia and India into US West Coast, and Europe, respectively.

"I think the arbitrage economics and demand was good, and we saw quite a number of jet fuel cargoes headed to US West Coast from South Korea in July and early August," a trader said Aug 16.

The rise in jet fuel demand from the US West Coast pushed the FOB Singapore jet fuel/kerosene cash differential returned to positive territory at plus 12 cents to the Mean of Platts Singapore jet fuel/kerosene assessment at the 0830 GMT Asian close Aug. 16, having previously been in premium territory over Aug. 6-11, S&P Global Platts data showed.

Supporting runs

The recovery in jet fuel demand for international flights is also coincided by recovery in domestic flights. Despite a sharp rise in new COVID-19 infections in Japan in recent weeks, ANA's domestic passengers increased 40.7% year on year to 645,879 in the Aug. 6-15 period, when JAL's domestic passengers rose 28.6% year on year to 487,442, the companies said.

Jet fuel demand recovery was among factors to support an increase in Japan's refinery runs in recent weeks. Japan's crude run rates rose to 71.3% over July 25-31, the highest level in 13 weeks, amid increased demand for transport fuels, according to the latest Petroleum Association of Japan data.

The country's estimated jet fuel shipments to the domestic market increased 6.1% to 1.46 million barrels in the four weeks to July 31 from the previous four weeks to July 3, according to Platts calculations based on the PAJ data.

Japan's second largest refiner Idemitsu Kosan said Aug. 6 it expects its refinery average run rates to improve to mid-80% in fiscal year 2021-22 (April-March) on the back of a continuous recovery in its oil products demand from the coronavirus pandemic, up from 78% in the previous fiscal year.

Idemitsu said it now expects its April-September jet fuel demand to jump 48.4% year on year as it expects to see a continuous recovery in its fuels demand from the pandemic, but its demand outlook remains below the same 2019 period.