January 30, 2015
Platts assessed Los Angeles jet fuel down 75 points/gal at NYMEX March futures contract minus 13 cents/gal.
A new ship, Ginny, was set to load from Asia to the US on Friday. Ginny, capable of carrying 65,000 barrels, was carrying jet fuel for Valero from South Korea to the US West Coast, with options to go to the US Gulf Coast, according to fixture reports.
A market source said L.A.'s falling prices were not reacting to the fixture though. The trader said prices were reacting to issues at Phillips 66's 139,000 b/d Wilmington, California, refinery.
"I'm surprised the basis didn't get even stronger with refinery buying," the trader said. "With the Wilmington issues I thought this would have spooked the market."
The Group 3 differential was assessed at NYMEX March ULSD futures contract minus 75 points/gal, up 6.5 cents to the highest level since December 9. The jump came on the change to the stronger underlying NYMEX March basis and strong refiner buying against the expiring February NYMEX contract, a market source said.
Refinery issues also could be contributing to Group 3 strength. Phillips 66's 306,000 b/d Wood River refinery in Illinois entered planned turnaround earlier in the month.
Asia rallying on West pull
The Asian jet fuel market continued its upward momentum amid an increase in buying interest due to recent pull of cargoes from Asia to the West, said trade sources Friday.
Reflecting firmer sentiment, the physical cash differential for FOB Singapore jet fuel rose for the third straight session on Thursday, firming 4 cents/barrel day on day to be assessed at minus 4 cents/b against Mean of Platts Singapore jet fuel/kero assessments.
Last Friday, the FOB Singapore jet fuel/kerosene cash differential was assessed at a three-year low of minus 57 cents/b to MOPS jet fuel/kerosene assessment.
According to shipping fixtures, Valero has put on subjects the Ginny for loading 65,000 mt of jet fuel on February 7, from South Korea to the US West Coast. Total has fixed the Ratna Namrata for loading 80,000 mt of jet fuel on February 23, from the Persian Gulf to the UK-Continent.
The lump-sum freight cost could not be confirmed.
In data out Thursday, Singapore's commercial onshore middle distillates stocks -- which include jet fuel, kerosene and gasoil -- for the period over January 22-28 rose by 4.1% week on the week to 10.811 million barrels, according to government agency IE Singapore.
Outflows of jet fuel from the city-state jumped around 41% over the same period to 91,195 mt from previous 64,474 mt, with almost half (47.8%) of the cargoes exported [43,583 mt] headed to Malaysia. Australia received the second highest volume at 18,822 mt, more than double from the previous week's 8,871 mt.
Additionally, gasoil demand remained weak in the region with the FOB Singapore physical cash regrade reflecting a stronger jet. The cash regrade -- the premium jet fuel commands over gasoil -- strengthened for a fifth consecutive session by 5 cents/b day on day to $2.90/b Friday.
UK Nov demand down 15%
UK demand for aviation jet fuel fell 14.9% year on year in November to 849,000 mt, Department of Energy and Climate Change data released Thursday showed, even as Heathrow airport reported record passenger volumes for that month.
Total domestic jet fuel demand was at its lowest monthly level since December 2013 when it was 838,000 mt.
As Europe's busiest airport, Heathrow is the largest source of aviation jet fuel demand in the UK. Market sources estimate daily consumption of jet at Heathrow to be as high as 15,000 mt a day, or approximately 450,000 mt a month. This equates to roughly 50% of all domestic jet fuel demand.
Some 5.47 million passengers traveled through Heathrow in November -- the second highest ever in a month, beaten only by December's numbers -- data released by the airport's media center showed.
Several market participants found it hard to reconcile the two seemingly incongruous data sets: record numbers for Heathrow but a sharp decline in jet fuel demand. "It's hard to explain -- record flight movements but a big drop in demand," said one trader. "I found no specific event that would trigger the fall," another trader said.
The percentage drop in domestic jet fuel demand was the largest since a 15.5% year-on-year fall in December 2013.