Singapore regrade: Jet loses lift as supply returns with shaky demand

• Bias remains to stay defensive on Singapore regrade, with headline and geopolitical risk the key caveat. Rising Asian jet supply, weaker East-to-LA arb pull and softer airline capacity are capping the upside.
• China is set to resume higher product exports from May, led mainly by jet and gasoline. For jet, this is the clearer bearish signal, especially after April exports dropped sharply.
• Higher refinery runs in the region add to the pressure. More runs mean more middle distillate output, reducing the scarcity premium that had supported Asian jet earlier.
• Australia remains structurally short, importing roughly 80% of its jet requirement. But the post-conflict scramble for replacement barrels is easing after recent engagement with China and South Korea, where supply resumption and cooperation were reportedly assured.
• The East-to-LA jet arb is still open, but the pull has weakened sharply. Ulsan-to-LA and Singapore-to-LA remain in the money, but margins are far below earlier $50-plus/bbl highs, so the USWC outlet is no longer pulling Asian jet as aggressively.
• Demand is also turning less supportive. Rising fuel costs and softer demand on some routes are forcing airlines to trim schedules, with global capacity reportedly cut by around 2 million seats in May, including a sizeable chunk from wider Asian airlines.
• Net-net, Singapore regrade looks capped in prompt. Chinese jet exports are expected to rise, refinery runs are improving, Australia’s spot scramble is easing, the LA pull is weaker, and airline capacity cuts are starting to weigh on demand.

About the Author
Abhishek is a Senior Oil Market Analyst at Sparta Commodities, based in Dubai, with a background spanning trading and analytics. Before joining Sparta, he held roles at Litasco, LSEG, and Reliance, where he focused on oil market analysis, spec trading, and broader oil market dynamics.
Connect: https://www.linkedin.com/in/akumardubai/

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