Asian jet fuel/kerosene derivative forward curve sustained in contango for a month

The Platts-assessed jet fuel/kerosene derivative forward curve sustained an overall contango one month since April 8. Platts is part of S&P Global Commodity Insight.

The Platts Asian jet fuel/kerosene M5/M6 derivative time spread stood at minus 5 cents/b at the May 9 Asian close, maintaining a contango for 23 consecutive sessions, though narrowing compared to minus 11 cents/b at the April 7 Asian close.

Still, the contango structure has steepened from the first instance on April 8, to the Asian close on May 8.

Market participants reflected that arbitrage economics are currently healthy, with tight supplies heard in Europe likely to bolster demand for Asian jet fuel/kerosene in the near term.

However, market analysts noted that rising costs for consumers are likely to dampen demand for leisure travel.

"Before tariff concerns escalated, the European Travel Commission had already noted an 8% drop in planned summer 2025 trips among younger Europeans due to rising costs. With limited progress on trade talks, mounting price pressures are likely to further squeeze household budgets and dampen travel demand," Hu You, research analyst at iFast Financial, said May 9.

Consumer confidence in the Euro area fell to -16.7 in April 2025, marking its lowest reading since November 2023, latest data from the European Commission showed.

"[Aviation fuel prices] remain vulnerable to tariff-driven cost pressures, such as higher duties on imported refinery catalysts, additives, and equipment, which could elevate production costs and become a key factor to watch in the second half of 2025... While headline indicators still point to relatively stable passenger volumes and fuel consumption, downside risks are rising," Hu added.

Analysts are looking to the end of US President Donald Trump's 90-day tariff salvo suspension to ascertain shifts in the US's tariff policy.

"Overall, we believe President Trump's tariff escalation is beginning to filter into the travel market by constraining consumer spending and disrupting airline supply chains," iFast Financial's Hu affirmed.

Uptick in open interest across 2026 futures contracts

Open interest further along the curve also surged week over week as market participants were hedging their positions out further down into the future.

Total open interest for monthly jet fuel/kerosene derivatives in 2026 climbed 7.56% to 14,533 contracts on May 7, compared to 13,511 contracts since the end of April, latest data from the International Continental Exchange showed.

The rise was led by a spike in open interest for derivative contracts across Q1 and Q4 2026. Notably, open interest extended further into January 2027, surging to 300 contracts on May 7, from 0 on April 30.

Platts assessed the Asian jet fuel/kerosene front month time spread -- an indicator of near-term sentiment -- down 56.67% to 26 cents/b at the May 9 Asian close, from 60 cents/b at the April 30 Asian close.

Demonstrating a sustained bearishness in the long term, the Platts-assessed Q4 2025/Q1 2026 Asian jet fuel/kerosene quarterly time spread more-than-doubled to minus 15 cents/b at the May 9 Asian close, compared to minus 7 cents/b at the April 30 Asian close, Energy data showed.