December 19, 2014
The Oklahoma Group 3 jet fuel differential plunged to a record low Friday on renewed selling interest in the thinly traded market.
Platts assessed Group 3 jet fuel down 8 cents at NYMEX January ULSD futures minus 24.25 cents/gal, the weakest differential since the NYMEX switched to ULSD in April 2013.
This also brings the outright assessment to $1.74/gal, the lowest level since 1.7136/gal on September 29, 2009.
The rapid decline in the differential occurred toward the end of the trading day based on sudden selling interest.
The market for Group 3 jet fuel -- also called Q-grade jet fuel -- is so thin that a single party attempting to buy or sell can bring volatility to the market.
"It's always a thin market on Q," a broker said.
"There is nothing 'usual' about Q, except that there is usually no bid and no offer."
Jet fuel for US Gulf Coast injection into the 72nd and final Colonial Pipeline shipping cycle of the year also saw a steep slide, falling 4.70 cents from where that cycle was assessed Thursday to minus 27.25 cents/gal.
Lack of buyers in Asia
Weak demand continued to keep a lid on price differentials in the Asian jet fuel/kerosene market Friday.
Singapore jet/kero was assessed at a 51 cents/barrel discount to Mean of Platts, up 3 cents/b on the day, but down from a 20 cents/b premium December 9.
Japan jet/kero was assessed 3 cents/b higher as well Friday, at a $1.62/b premium to MOPS, although that was down from a $2.13/b premium December 5.
Stocks in both Singapore and Japan have fallen recently, although Asia appears to be well-supplied relative to demand.
Commercial middle distillate stocks in Singapore fell for a fourth consecutive week to 7.764 million barrels in the week ended December 17.
The stocks were last lower in the week ended January 1 at 8.023 million barrels.
International Enterprise Singapore data released late Thursday showed total stocks of middle distillates in landed storage, including gasoil and kerosene, fell 9.3% week on week.
The stocks were down from 8.480 million barrels in the corresponding week of 2013.
In spot news, Taiwan's refinery Formosa Petrochemical Corp. is offering 300,000 barrels of jet A-1 fuel loading January 21-25 from Mailiao at the January average of Mean of Platts Singapore jet fuel/kerosene assessments, FOB. The tender is set to close December 19.
The Taiwanese refiner last sold 900,000 barrels of jet A-1 for loading from Mailiao over October to China Aviation Oil, Shell and Sinopec between a discount of 5 cents/b and a premium of 25 cents/b to the October average of Mean of Platts Singapore jet fuel/kerosene assessments, FOB basis.
Europe well bid
The European jet market remained well bid into France, the Netherlands and the UK Friday.
The airline market has been strong through the quarter, with some reporting a 2%-3% year-on-year increase in demand.
"Jet demand has been good the entire year, up 1-2% in Europe year-on-year and 5% in Asia," a trader said.
However, Europe remained well-supplied, which has kept a lid on price differentials. Year-end de-stocking was not very visible yet amid sustained short-covering into some systems.
Some sources expected a more balanced market in January, noting weaker buying interest.
Heating demand into the UK improved year-on-year but so far had not exceeded expectations, sources said.