OREANDA-NEWS. October 16, 2012. China Aviation Oil is seeking more jet fuel for November, after having already bought nearly 2.7 million barrels for October and November, as the supply of Asian jet fuel is expected to tighten during the year-end holidays, industry sources said.

CAO is Asia's top jet fuel buyer and any additional spot purchases by the company usually keep the Asian jet fuel market well supported.

In its latest tender, the company is seeking 25,000 tonnes, or about 200,000 barrels, of jet fuel for Nov. 5-8 delivery into Huangpu. The tender closes on Oct. 1, with same-day validity.

Last week it bought close to 1.6 million barrels at premiums averaging 60-70 cents a barrel above Singapore November quotes for cargoes to be delivered in November through its monthly tender, traders have said.

This is double what the company paid for earlier cargoes.

Also last week, CAO bought 300,000 barrels of jet fuel to be loaded from Taiwan in mid-October in a sale tender issued by Formosa Petrochemical Corp at a premium of 59 cents a barrel above Singapore quotes, traders said.

CAO officials could not immediately be reached for confirmation of the prices for the tender nor the reason for the additional requirements.

The premiums paid by CAO for the jet fuel cargoes have been seen as higher than market value as premiums elsewhere have been falling amid weaker demand from Europe, where many Asian jet fuel cargoes go.

CAO's buying spree is likely to be due to stockpiling by the company ahead of peak travel demand for year-end holidays when air travel is expected to pick up, traders said.

North Asian refineries that usually supply to CAO, are expected to maximise production to produce more of the heating fuel kerosene and less jet fuel, which could mean fewer jet fuel cargoes being offered in the spot market, they added.

Demand had also picked up for October cargoes due to China's "Golden Week" holidays this week, when air travel is expected to increase as people head to their hometowns or away on holiday.

Domestic supply within China is also expected to be tight, as top refiner Sinopec Corp started shutting down a processing unit at a subsidiary refinery in Guangzhou, preparing for safety and environmental checks after problems reported by state media.

The shutdown began on Saturday at the crude unit, which will be down for at least 20 days.