* Jet fuel prices down by about $40 a tonne since Thursday

* Analysts see stock build up, surplus may be stored at sea

* Around 800,000 bpd cut in Europe

LONDON, April 19 (Reuters) - The volcanic ash cloud from Iceland has cut world jet fuel demand by at least one million barrels per day (bpd), or about a fifth of global consumption, market analysts said on Monday.

The eruption has been disrupting air travel in Europe since Thursday, with around 70 percent of all flights grounded.

Before the travel disruption, which is thought to be the largest since the Sept. 11 attacks [ID:nLDE63I0GA], Europe’s jet fuel demand averaged 1.17 million bpd in January and 1.25 million bpd last year, the latest report from the International Energy Agency (IEA) showed.

The estimated cut in Europe alone is equivalent to roughly 20 percent of global jet fuel demand, which JBC Energy estimates about 5 million bpd.

The cut is more than one percent of total global oil consumption, which the IEA expects to average 86 million bpd in 2010.

With flights from other continents to Europe also grounded, the total impact on demand is even higher.

“Such a major disturbance will have a sizeable impact on price formation,” JBC Energy analyst David Wech said.

Jet fuel prices have fallen by $40 a tonne since Thursday, to trade around $720-$730 a tonne in Europe. By comparison, European gasoline prices have been down by about $25.

“In addition to the reported regional consumption, it is likely that a further share of other regional demand represents flights to Europe,” JP Morgan analyst Lawrence Eagles said.

“Therefore we might reasonably assume that 10 percent of Asian demand and North American demand is affected by the disruption, accounting for a further 230,000-250,000 bpd of lost demand.”

Traders estimated a loss of African jet fuel demand at about 25,000 bpd.

SHIPPING FUEL

In contrast, Marine fuel prices have risen about $10 since late last week. Some traders expected an increase in use of alternative seaborne transport if the flight disruption is prolonged.

Eurocontrol, the European aviation agency, said only 8,000 to 9,000 flights were expected to take place on Monday, compared with about 28,000 that would normally be expected. [ID:nWEB0415]

Demand had already been pressured by the economic crisis in recent years, leaving storage tanks in Europe brimming with jet fuel even before the Icelandic eruption.

“The loss of flying from Friday to Tuesday should have resulted in a European stockbuild in jet fuel of about 5 million barrels and that comes at a time when stocks of jet in Europe are already plentiful,” Petromatrix analyst Olivier Jakob said.

Stocks of jet fuel in independent storage at the Amsterdam-Rotterdam-Antwerp trading hub (ARA) stood at 892,000 tonnes last week STK-JET-ARA, just 15,000 tonnes lower than the record level seen at the height of the recession. [ARA/]