July 21, 2014
US Atlantic Coast jet fuel differentials Monday shot up to their highest levels in more than three months as buyers struggled to find product despite recent open arbitrages from the Gulf Coast.
Platts assessed USAC jet fuel at NYMEX August ULSD futures plus 1.75 cents/gal, 3.25 cents/gal higher than Friday. This marks their highest level since plus 4.40 cents/gal on April 2.
In the last month, though, the spread between the Gulf and Atlantic coasts has been wider than the 4.50-cent/gal Colonial Pipeline tariff on 12 of 20 trading days. But the market has not seen the extra supply that the open arbitrage seemed to indicate.
"It seems bids have been waiting to see offer all day," one broker said. "I'm not sure where all the product has disappeared."
USGC jet fuel Monday fell 50 points to minus 6 cents/gal, further expanding the spread to the USAC to 7.75 cents/gal, the widest since 7.85 cents/gal on April 3.
Platts assessed the NYMEX August ULSD futures contract at $2.8630/gal at 3:15 pm EDT.
European demand coming off
European jet price differentials continued to slip off last week rally Monday, with CIF Northwest cargoes slipping 50 cents/mt to be assessed at a $78.25/mt premium to ICE gasoil.
That was down from $79.75/mt July 16.
Domestic buying interest appeared to have waned in recent days with momentum firmly behind sellers in a steeply backwardated market. Supply on offer was limited, however, after longer than anticipated refinery maintenance, run cuts, and a lack of storage incentives had left thin inventories.
With little slack in the supply chain, pockets of demand were given additional weight.
Novatek was also heard to have chartered the Adfines Sky to load 16,000 mt of Jet A-1 from its Ust Luga terminal over July 24-26, according to shipbroker data.
The Torm Vita was chartered by Mercuria for a Persian Gulf-UK Continent voyage, loading 40,000 mt July 27, at $1.4 million. Cepsa had lined up the Nord Integrity for a Yanbu-West Mediterranean voyage, with additional UKC charter party options at $775,000. The vessel is for 33,000 mt loading July 27.
Asian fundamentals weak
The Asian jet fuel/kerosene market remained largely depressed Monday, underpinned by weak regional demand.
Sources said increasing outflows from Asia and the Persian Gulf to Europe and the US, where buying interest was stronger, had earlier provided some support, but this faded late last week.
The cash differentials for cargoes loading from the main trading hub of Singapore had hit as high as minus 4 cents/b to last Wednesday, up from minus 43 cents/b just eight days prior. But weak fundamentals exerted downward pressure later in the week, dragging differentials back to minus 15 cents/b on Friday.
On the tender front, Kenya's Oil Industry Pipeline Co-ordination Secretariat was seeking to buy two cargoes of jet fuel, 49,997 mt and 60,000 mt, respectively, for delivery into Kipevu Oil Terminal, Mombasa over September 5-7 and September 16-18, in a tender that closes July 22 with validity until July 23.
The Oil Industry Pipeline Co-ordination Secretariat was heard to have last bought two jet fuel cargoes of 60,000 mt and 36,269 mt for delivery to Mombasa over August 19-21 and August 27-29, respectively.
The August 19-21 cargo was heard awarded to Galana Oil at a premium of $12.15/mt to the August average of MOPAG jet fuel/kerosene assessments, CFR, and the second cargo heard awarded to Vivo Energy at a premium of $14.94/mt to the same marker.
In other news, Vietnam's state-owned Petrolimex, which accounts for more than half the country's domestic oil product sales, last Friday cut its kerosene, diesel and fuel oil retail prices but kept gasoline rates unchanged, according to the company's website.
The price adjustments were based on recent movements in international oil markets, the company said. Kerosene prices were cut by 0.6% to Dong 22,810/liter.
Most oil companies in Vietnam typically make the same price adjustments as Petrolimex, resulting in almost uniform prices nationwide.