October 30, 2014
The US Gulf Coast jet differential jumped 2 cents Thursday as traders looked at strong export and airline demand whittling down stockpiles.
Platts assessed Gulf Coast jet at NYMEX December ULSD futures minus 6.50 cents/gal, while Los Angeles gained 75 points to minus 2.25 cents/gal and New York barges rose 1 cent to minus 0.75 cent/gal. Chicago and Group 3 out of Oklahoma were unchanged at plus 13 cents/gal and minus 4 cents/gal, respectively.
Strong buying pressure came as US Energy Information Administration data released Wednesday showed total jet fuel stocks dropped 2.28 million barrels from the week before to 37.65 million barrels last week.
"I think we are seeing a bit of an overreaction to the stocks report," one trader said. "If you dissect the data, you see that the draw on products was a function of seasonal production hitting a low as well as an uptick for ULSD demand in preparation for wintertime. It indicates jet production will suffer in favor of more ULSD."
The same data showed a sharp gain in demand, which sources partly attributed to nicer weather boosting air travel ahead of the busy winter holiday season.
Exports also were having an effect. EIA released monthly data Thursday that showed jet fuel exports rose to a record 6.63 million barrels in August, the latest month. Nigeria had the highest volume draw from the US at 1.51 million barrels, equivalent to six average-size cargoes, followed by Canada with 1.23 million barrels.
Netherlands and Norway each had two cargoes' worth, while Gibraltar, Mexico, Panama and Brazil each had slightly more than one.
Sources said strong draws continue in Canada because of fall refinery maintenance and in Nigeria because it is struggling with inadequate domestic refining. Sources also have said Latin American demand remains solid, with at least one jet cargo loading for Brazil.
Shippers listed a new fixture Thursday that said Valero was chartering a cargo for jet fuel loading November 4 out of the Gulf Coast to the East Coast of Canada or Europe.
The Asian jet fuel/kerosene market remained relatively robust Thursday due to spot demand around the region.
In addition to buying interest from China, demand from Indonesia also added support, traders said. Indonesia's Petral, the trading arm of Indonesian state-owned Pertamina, bought up to 500,000 barrels of jet fuel for loading over October.
The tender were awarded to Shell and Unipec at a premium of around $2/barrel to the Mean of Platts Singapore jet fuel/kerosene assessments, 11 days around bill of lading, CFR Jakarta and Manggis.
According to one source familiar with Pertamina's November import plans, the company is likely to import 440,000 barrels of aviation fuel next month.
In addition, Petral has issued an import tender for H1 2015, seeking between one and four cargoes per month of 100,000-140,000 barrels and/or 180,000-200,000 barrels each. The cargoes are for delivery into Jakarta, Surabaya or Manggis over January 1-June 30 next year.
In other news, Japan's jet fuel stocks fell by 4.9% week on week to 6.29 million barrels as of October 25, but they were up 11.9% year on year, according to data released by the Petroleum Association of Japan Wednesday.
Meanwhile, kerosene stocks in the country inched up 0.4% week on week to 19.48 million barrels, but were down 4.1% year on year.
The PAJ data also showed a decline in jet fuel production in the week of October 19-25, by 6.8% to 1.45 million barrels, while kerosene production fell by 2.5% to 2.16 million barrels.