October 21, 2014
The Los Angeles jet fuel differential dropped 75 points Tuesday as traders waited out a larger-than-normal cargo arriving into the harbor.
Platts assessed Los Angeles at NYMEX November ULSD futures minus 5.50 cents/gal.
The West Coast has been under pressure since the mid-September end of the summer travel season as stocks and production moved well above 2014 averages. As of October 10, US Energy Information Administration data showed USWC jet stocks of 10 million barrels were 1.2 million barrels above the 2014 average, while refinery production of 457,000 b/d was 27,000 b/d above the average.
Imports from Asia have been persistent, though not spectacular. But sources and Platts cFlow ship-tracking software showed the LR1-sized Two Million Ways arriving Thursday with 500,000 barrels of jet fuel from Asia into Los Angeles for Morgan Stanley.
"LA is getting weaker," one source said. "I also heard Asian jet demand is weak, which is a possible reason to send some barrels to the USA."
No other ships appeared headed to the West Coast, although some were en route to Panama and sources said the arbitrage is close enough to think about fixing more LR1-sized ships from South Korea.
The Gulf Coast jet fuel differential dropped 50 points to minus 8.50 cents/gal, while New York barges slipped 75 points to minus 4 cents/gal.
Europe on the rise
Northwest European jet price differentials continued to rise Tuesday on a tight availability of cargoes.
FOB cargoes were assessed at a $73.25/mt premium to ICE gasoil, up $1.25/mt on the day, and up from a $60/mt premium October 10.
While cargoes continued to make their way to the North, through the Mediterranean, strength East of Suez has made fixing spot cargoes difficult.
Freight remained relatively strong on tight tonnage of clean tankers East of Suez, with lump sum rates for Long Range 65,000 mt cargoes on PG-UKC routes assessed at $2.2 million for the third day.
Traders said higher European prices might help open arbitrage opportunities for later arrivals in Europe.
"With arbs from USGC open, it's likely oil will flow as USGC refiners come back from turnaround," said a trader.
In tender news, Jordan Petroleum was heard to have bought 45,000 mt of Jet A-1 fuel in two equal lots for delivery over H2 November and H2 December into Aqaba from Kuwait's IPG at a premium of $19.27/mt to Mean of Platts Mediterranean jet/kerosene assessments.
Jordan was last heard to have bought 25,000 mt of Jet A-1 fuel for delivery over December 1-5 from BB Energy at a premium of $14.88/mt to MOPMed jet/kerosene assessments.
Tanzania's PIC issued a tender to buy a combination cargo of 17,826 mt of jet fuel, 1,150 mt of kerosene and 14,873 mt of 93 RON gasoline for delivery over December 17-19 in a tender that closes October 30.
Taiwan's CPC has yet to award its jet fuel buy tender for delivery in November, which closed October 15 with validity until October 17, and it was not immediately clear if it had been canceled. CPC was looking to buy 40,000 kl of Jet A-1 fuel for delivery over November to either Shen-Ao or Kaohsiung. It was the company's first jet fuel import tender for 2014, and the reasons for the move were not clear.