June 30, 2015
Lower differentials for jet fuel cargoes traded in the region reflected current oversupply situation plaguing the Asian market, said sources Tuesday.
Malaysia's Petronas was heard to have sold via tender 225,000 barrels of jet fuel at a discount of $1.20/barrel to the Mean of Platts Singapore jet fuel/kerosene assessments, FOB basis.
The cargo is for loading July 12-13 from Kertih and was sold to oil major BP.
The price is substantially lower compared with the discount of 65 cents/b fetched for Petronas' previous cargo sold last month, of same volume, and loading June 25-26.
However, trading sources were not surprised by the sharp discount, especially since jet fuel cargoes loading from South Korea in and around July were being traded at a discount of 90 cents/b to MOPS jet fuel/kerosene assessments, as compared with a discount of 50 cents/b in June.
South Korea is the biggest seller of jet fuel in the region but the bulk of this ends up in the US.
The abundant supply has also caused the jet fuel crack spread against Dubai crude to narrow to a one-year low of $11.85/barrel Monday before rallying Tuesday to $12.41.
Prior to Monday the crack had last been lower on July 9 at $11.41/b.
Separately, Kuwait's KPC was heard to have awarded its sell tender for 40,000 mt of jet fuel loading over July 19-20 from Kuwait at a premium of around $1.65-$1.80/b to Mean of Platts Arab Gulf jet fuel/kerosene assessments.
It is not known who the buyer is.
KPC last sold two cargoes of jet fuel, each comprising 60,000 mt, for loading from Kuwait over July 17-20 at a premium of $1.75-$1.85/b to MOPAG jet fuel/kerosene assessments, FOB.
The buyers were heard to be Shell and IPG.
LA imports not enough: bulls
Los Angeles jet fuel rose another 1.75 cents Tuesday as strong summer travel demand continued to outpace production and imports.
Jet fuel production in the region has faltered in recent weeks, reversing the recovery caused by several refineries coming online following a series of maintenance last month. In the past week, jet fuel has risen almost 5.50 cents.
ExxonMobil reported flaring at its 155,000 b/d Torrance, California refinery in connection with planned unit maintenance.
Market sources said that the unit responsible for the flaring was a hydrocracker.
Platts assessed the Los Angeles jet fuel differential at the NYMEX August ULSD futures contract plus 1 cent/gal, or $1.8973/gal outright. This is the first time the differential has been a premium to the underlying futures since June 9.
While imports have been consistently arriving into the region, the price jump indicates that the extra barrels are not enough to quench demand.
"Demand is strong and cargoes really have not made a dent in stocks," one trader said. "All bullish."
Maersk Murotsu was heard to be carrying jet fuel to Los Angeles from South Korea, arriving July 3, and the Petali Lady was heard to be carrying jet fuel for Chevron to Los Angeles, with a July 2 arrival date, according to Platts cFlow ship-tracking software.
Pacific Jewel also was heard carrying jet fuel to Los Angeles, arriving July 14.
The US Gulf Coast jet fuel market rebounded a cent Tuesday, the second and final day to trade Gulf Coast jet fuel on prompt 37th cycle on Colonial Pipeline.
Platts assessed the Gulf Coast pipeline differential 1.25 cents lower to the NYMEX August ULSD futures contract minus 17 cents/gal, or $1.7273/gal outright.
During the Platts MOC assessment process Tuesday, 300,000 Gulf Coast jet fuel barrels traded, bringing the total traded during prompt 37th cycle to 825,000 barrels.
BP was the largest seller, providing 225,000 barrels while Noble was the largest buyer, taking 200,000 barrels.
Previously, 925,000 Gulf Coast jet barrels traded during the the prompt 36th cycle to 925,000 barrels.
By comparison, a total of 1.3 million barrels of jet fuel traded during the 35th cycle, 550,000 barrels during the 34th cycle and 1.18 million barrels during the 33rd cycle.
The New York Harbor jet fuel market was unchanged Tuesday as Platts assessed New York Harbor barges at NYMEX August ULSD minus 8 cents/gal, or $1.8073/gal outright.