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As Air Traffic Continues to Recover, Jet Fuel Price Gains Outpace Oil and Gasoil

Minneapolis, MN | September 12, 2023 | By: Steve Sinos, Blue Lacy Advisors, LLC

With 2019 traffic levels in sight, jet demand has rallied to within historical norms, resulting in supply deficits as global refiners shift yields toward diesel/gasoil.

Three Things

  1. Air traffic has more/less recaptured 2019 highs globally. Since the beginning of 2Q2023, open access in previously lagging sectors has allowed passenger traffic to flow freely, allowing global traffic to exceed 2019, effectively marking the end of three years of disruption. However, one should watch for seasonal headwinds.

  2. Asia is still recovering, with cargo a persistent weak spot, but the pace of recovery is improving, leading to an estimated 81% capture of 2019’s passenger count. Meanwhile, Europe came within 5% of 2019. In most regions, summer demand was near the top of its historical range.

  3. This allowed jet fuel prices to outpace oil price gains, riding the historical premiums seen among its middle distillate peers, though with observable volatility in jet’s spread to gasoil.

Global Flight Activity Continues to Breakout

After years of disruption caused by pandemic policy and war, it appears as though passenger traffic has normalized. We’ve been tracking this since the end of travel restrictions in Asia, which were thought to be the primary limitation to full recovery, and the trend is clear. As far back as February, signs of the recovery could be seen in global data, but regional weakness caused worry. But in the six months since the release of travel restrictions, total global flight activity tracked by Flight Radar has been above its corresponding day in 2019.

*This summary is based off September 4, 2023

A free excerpt, such as this one, will be published on a delay periodically. This is an excerpt from Blue Lacy Advisors, LLC's (“Blue Lacy”) weekly commentary for clients, which is based on a collection of models, research/analytical subscriptions, and bespoke work. Each week Blue Lacy explores how market drivers included in these analyses might affect or be used in clients' planning, budgeting, and execution of strategy. Call Blue Lacy to make an appointment today!


Meet the Author!

Phone: +1-832-413-3124

Steve has spent his career in strategy, risk, trading, and investment. He works with investors to source investments in opportunistic or high growth sectors, with particular interest in early-stage companies solving clearly defined problems.

He is currently a Managing Partner with Blue Lacy Advisors LLC, giving management teams and investors confidence in their decision making by supporting strategic planning and execution, risk management, commodity trading, and market analysis.

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