October 24, 2014
The US Gulf Coast jet differential fell slightly Friday and ended the week 2.50 cents lower as worries of the Ebola virus' effect on air travel demand continued.
Platts assessed benchmark Gulf Coast jet down 25 points to NYMEX December ULSD futures minus 9 cents/gal, compared with minus 6.50 cents/gal heading into the week.
"The flat price is going to keep coming off is what I suspect," one jet trader said. "Everything I see says bear. I think a couple more cases of Ebola and you will get some serious demand destruction."
Airline analysts looking through a slew of earnings reports, however, said the demand environment appears to be holding steady and US airlines have not been guiding down jet fuel costs as much as jet fuel prices have declined.
"Gulf Coast spot jet fuel is now $2.40/gal (excluding taxes and into aircraft costs)," Helane Becker of Cowen and Co. wrote Friday. "Airlines are guiding [fourth quarter] jet fuel to a range of $2.70 to $2.80/gal...The airlines have not lowered fares as jet fuel has declined, and, in fact, raised fares last week."
Jet fuel prices have been on the decline since the very end of August, mostly due to the declining global oil complex but also in regional differentials as summer travel ended.
Airlines have tended to enter the hedging and physical markets and lock in prices in previous sharp flat-price declines. But sources said that has not happened in big volumes this time, possibly because of a sharp market backwardation.
Singapore at a discount
Singapore jet/kerosene price differentials remained at a discount to Mean of Platts Friday on a lack of buying interest.
Singapore jet/kero was assessed at an 8 cents/barrel discount to MOPS, up 4 cents/b on the day.
Jet fuel import demand from the key Chinese market was lackluster as domestic refiners continued to boost production. Chinese output in September climbed 17.3% year on year to 2.63 million mt, according to latest data from the National Bureau of Statistics.
Inflows of jet fuel/kerosene for the first nine months of 2014 totaled 3 million mt, falling 29.6% compared to the same period last year.
Separately , Vietnam's state-owned Petrolimex, which accounts for more than half of domestic oil product sales, has slashed its oil product prices 2.1%-3.2%, effective Thursday, to reflect recent movements in international oil markets, the company said Thursday.
For kerosene, prices were cut 2.1% to Dong 20,060/liter (94 cents/liter).
Most other oil companies in Vietnam typically make the same price adjustments as Petrolimex, resulting in almost uniform prices nationwide.
Local oil retailers last rolled back their oil product prices 2.8-4.2% on October 13.