An approximate 37% of distillates stored on floating vessels are jet fuel, but a recent drop in spot prices for jet fuel may see this decline.
Jet fuel spot prices fell sharply on 21 September as benchmark ICE gas oil intermonth spreads strengthened, prompting traders to pull distillates out of floating storage.
There is still around 30 million barrels of distillates held on idle tankers, trade sources estimate, but the return of backwardation to ICE gas oil futures is now hampering the storage market.
Distillates brokers say the drop in jet fuel prices is probably due to backwardation because operators need to unload tanks.
Jet fuel barge premiums fell $5 (3.74) on 21 September to trade at premiums of between $36-$37.50 to ICE gas oil futures. Four barges changed hands in the afternoon trading session, with airline KLM and Glencore seen selling and Shell and Total on the buy side.