Oil price remains high


Despite slower global economic growth, oil prices stayed at a relatively high level well into the new year. On 31 December 2011 a barrel of Brent Crude cost USD 107.38. The average price of USD 110.82/barrel was 37.9 per cent higher than in the previous year.

Price development of crude oil and kerosene (line chart)

The jet fuel crack, the price difference between crude oil and kerosene, moved between USD 16/barrel and USD 18/barrel in 2011. The conflicts in North Africa at the beginning of the year and stock market turbulence in August nevertheless contributed to greater fluctuations of up to +/–25 per cent at times. The persistently high intra-day price fluctuations for jet fuel crack are significant and stem largely from the high volatility of exchange-traded crude oil. With the early arrival of winter in the north-eastern US states and the concomitant increase in demand for heating oil, coupled with steady demand for diesel from European industry, the jet fuel crack escaped from its broadly sideways trend at the end of the third quarter 2011, rising at times to over USD 23/barrel. On average over the year it quoted at USD 17.33/barrel and thus 54 per cent higher than in the previous year. The price at year-end was USD 17.62/barrel.

This took the average price for kerosene to a total of approximately USD 1,010 per tonne, which represents an increase of around 40 per cent compared with the previous year. The fuel price is a central factor behind changes in the Lufthansa Group’s expenses. To limit the ensuing risks, Lufthansa also pursues systematic risk management for this raw material with a rule-based hedging policy. In 2011 this improved the operating result by EUR 694m. Detailed information on the hedging policy can be found in the “Risk and opportunities report”.

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