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Platts Jet Fuel

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US Gulf Coast jet fuel price differential near one-year low

Houston (Platts)--14Nov2017/732 am EST/1232 GMT


The price differential for jet fuel in the US Gulf Coast dropped to its lowest level in nearly a year amid low seasonal demand and increased regional production.

Gulf Coast jet fuel for delivery on Colonial Pipeline's 65th cycle fell 1.8 cents on scheduling day to be assessed at NYMEX December ULSD minus 18.85 cents/gal.

This was the lowest differential since December 6, 2016, when it was assessed at futures minus 19 cents/gal.

The product traded as low as futures minus 20.25 cents/gal during the Platts Market on Close assessment process, before rising to the assessed level -- the final trade before closing.

Demand for passenger flights in the country is typically low during the fall season, which consequently keep jet fuel demand low.

North American air passenger traffic grew only 0.4% in September compared to the same month last year, according to the latest Air Transport Association data.

A source said that increased Gulf Coast jet fuel production also contributed to the declining differentials in the region.

"With refinery crack spreads over $20/barrel, refiners are maxing out production to capture the higher margins," he said.

Gulf Coast jet fuel production rose to 853,000 b/d during the week ended November 3, the highest level in 11 weeks, Energy Information Administration data showed.

"Even if the jet differential falls a penny or two or three, it does not matter with the NYMEX up so much. So refiners are getting while the getting is good," he added.

Additionally, differentials in the region fell amid continued allocation on Colonial Pipeline, indicating that there there are more requests for pipeline space than availability.

This allocation limits the ability to transport refined products, including jet fuel, from the Gulf Coast to the Atlantic Coast, despite arbitrages continuing to widen.

--Emmanuel Belostrino, emmanuel.belostrino@spglobal.com
--Edited by Derek Sands, derek.sands@spglobal.com

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The Jetfuel Price Monitor is a joint Platts - IATA initiative
The index and price data shows the global average price paid at the refinery for aviation jet fuel at the reported date.

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