September 29, 2014
The New York jet fuel barge differential dropped 1 cent Monday, reaching a discount to the underlying NYMEX ULSD futures contract for the first time since mid-July.
Platts assessed benchmark New York barges at NYMEX November ULSD futures minus 0.25 cent/gal, a low since minus 1.50 cents/gal on July 18.
The Gulf Coast, meanwhile, rose 65 points to minus 3.45 cents/gal, possibly helped by steady export demand.
The so-called "up-down" from the Gulf Coast to New York barges was only 2.55 cents, which is below the 4.51-cent tariff on Colonial Pipeline. But the New York barge premium had been as high as 28.75 cents on August 29 and was wide open through mid-September, encouraging extra supply shipping from the Gulf Coast that was still arriving in the Atlantic Coast.
Several jet fuel cargoes also were heard out of Venezuela, likely heading to Florida or other parts of the East Coast. US exports likely remained solid, though mostly out of the Gulf Coast to Canada, Africa and Latin America.
Once a heavy net importer, the US turned into a net exporter of jet fuel in 2011. Energy Information Administration data released Monday showed the US exported its second-highest level of jet fuel in July, at 6.4 million barrels, behind only December's 6.6 million barrels.
Canada was the top destination with 1.67 million barrels, about equal to almost six average cargoes. The Netherlands took in 1.15 million barrels, followed by Nigeria at 854,000 barrels, Mexico at 719,000 barrels, Panama at 593,000 barrels, Israel at 273,000 barrels, Belgium at 260,000 barrels and Gibraltar at 210,000 barrels.
The US imported only 2.65 million barrels in July, led again by South Korea as the main source at 1.36 million barrels, followed by Venezuela at 606,000 barrels, China at 501,000 barrels and Canada at 179,000 barrels. It was the most jet fuel ever imported from China into the US in a month.
Valero was the largest importer, with 714,000 barrels, mostly from Venezuela into Florida. Morgan Stanley followed by importing 650,000 barrels, mostly from China into California. Vitol brought in 415,000 barrels, all from South Korea into Los Angeles.
NWE pulling barrels
Northwest European jet cargoes firmed at the start of the week, responding to a structural shift over prompt dates as arbitrage opportunities north tightened.
Responding to the firming sentiment, front-month swaps to hedge forward cargo sales next month climbed $1.25/mt to $74.25/mt.
Jet exports from Libya were heard to be making their way into the spot market again. Opportunities to take those north looked unlikely, according to sources, adding that were the north to continue to firm against the balanced supply environment in the Mediterranean then the arbitrage could soon become workable again, sources said.
A steady flow of cargoes en-route to Europe from the Persian Gulf were making their way north, with the 40,000 mt Histria Ambra loaded from Yanbu seen in Palma, Mallorca, the 40,000 mt Malbec, also loaded from Yanbu, heading north through the Red Sea closely followed by the Marrianne Kirk, which loaded in Jubail.
Emerging incremental demand continued to lend support to Asia's jet fuel/kerosene market Monday.
Renewed buying interest for the middle distillate has propelled the cash differentials for cargoes loading from the main trading hub of Singapore to 45 cents/barrel to Mean of Platts Singapore jet fuel/kerosene assessment Monday. That was up from a discount of one cent/b September 16.
Indonesian state-owned Pertamina's trading arm Petral is re-seeking up to 500,000 barrels of jet A-1 for October delivery, after having canceled a previous tender that sought the cargoes for the same delivery dates.
The current tender, which closed Monday, sought two parcels, each 110,000-140,000 barrels or 180,000 barrels, for delivery into Jakarta over October 10-12 and October 14-16, and 110,000-140,000 barrels for October 12-14 delivery into Manggis.
For September, Petral was heard to have bought up to 480,000 barrels in two to three cargoes at a premium of $1.80/b to Mean of Platts Singapore jet fuel/kerosene assessments, 11 days around bill of lading, on a CFR Jakarta basis. The seller was said to be an oil major. This was not confirmed with Petral.
Market observers reiterated that Petral has been seeking spot imports because of a 35-day planned partial turnaround at its 348,000 b/d Cilacap refinery in September-October.
The ex-refinery jet fuel prices at which China National Offshore Oil Corp., PetroChina and Sinopec will supply to China National Aviation Fuel are expected to fall for a fourth straight month in October by about Yuan 205.79/mt ($33.46/mt) from September, according to Platts estimates.
The three suppliers' reference ex-refinery jet fuel ceiling prices for October are expected at Yuan 6,599.96/mt, excluding a premium of Yuan 30/mt, according to Platts calculations.
The premium is negotiated between CNAF and its three suppliers on an annual basis.