October 23, 2014
Platts assessed Gulf Coast jet 80 cents higher at NYMEX December ULSD futures minus 8.75 cents/gal, while New York barges rose 50 points to NYMEX November futures minus 3.75 cents/gal.
Los Angeles dipped 50 points to November minus 6.25 cents/gal as a larger-than-normal jet cargo from Asia was set to arrive Friday, according to Platts cFlow ship-tracking software.
Jet fuel prices have been on the decline in September and October, mostly due to the declining global oil complex but also a drop in regional differentials.
In the past, US airlines have tended to enter the hedging and physical markets and lock in sharply lower outright prices, boosting the differential. But sources said that has not happened in big volumes this time, possibly because of a sharp market backwardation.
Flight volumes usually taper off as well between the summer and winter holiday seasons, adding to lower demand. US Energy Information Administration data released Wednesday showed a 44,000 b/d weekly decline in product supplied, also called implied demand, to 1.44 million b/d for the week ending October 17.
United, American, Southwest, Jet Blue and Alaska airlines reported strong or record quarterly earnings Thursday, citing lower fuel costs, continued capacity discipline and solid ticket bookings despite Ebola fears, echoing statements made last week by Delta Air Lines.
American Airlines, which does not hedge its jet fuel exposure, had a record $1.2 billion quarterly profit, excluding special charges. United Airlines had $1.1 billion earnings, its highest quarterly profit ever, saying traffic grew 3.9% but capacity only rose 0.5% year-on-year.
NWE cargo tightness easing
Some of the prompt tightness appeared to be easing from the CIF Northwest European jet cargo market Thursday, as price differentials fell for a second day.
Northwest European cargoes were assessed at a $69/mt premium to ICE gasoil, down $3/mt.
However, the market structure remained steeply backwardated, at 18 cents/day.
Healthy appetite for kerosene heating oil from end-consumers, encouraged by lower outright prices, was partly responsible, traders said. Good demand for 10,000-12,000 mt cargoes in Northwest Europe was also heard to have been pulling barrels from storage over the week, to fill both jet and kerosene shorts, while strong netbacks to ARA cargo premiums for kerosene into UKC was encouraging refinery exports, one source said.
"West Coast UK and Ireland are short kero at the moment. We are seeing good interest there," a trader said.
A number of cargoes were heard for Persian Gulf-Northwest Europe. Shell was heard to have a 60,000 mt cargo aboard the 74,862 dwt Tonna for November 7 loading, BP a 40,000 mt cargo for November 4 loading from New Mangalore-UKC, Vitol 40,000 mt aboard the Alpine Myster for Red Sea loading November 1, with UKC options.
A further 40,000 mt cargo heard for October 30 loading for Persian Gulf-UKC. For later arrival, the 115,462 DWT Southport was heard done for at 90,000 mt cargo PG-UKC, loading November 20.
India's Mangalore Refinery and Petrochemicals Ltd. Thursday was offering 40,000 mt of jet A-1 fuel for loading over December 3-5 into New Mangalore, on the west coast of India.
The tender closes October 29, with validity expiring on October 30. MRPL last sold a 40,000 mt cargo of jet A-1 fuel for loading over November 20-22 from New Mangalore to BP a discount of around $1.25/barrel to the November average of Mean of Platts Singapore jet fuel/kerosene assessments, FOB.
Taiwan's CPC was heard to have awarded its jet fuel buy tender for delivery in November to Winson Oil at a premium of $1.20/barrel to MOPS jet fuel/kerosene assessments, traders said Thursday.
However, sources at both CPC and Winson Oil declined to comment on the results of the tender. Early last week, CPC had issued the buy tender for 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.