October 22, 2014
The US Gulf Coast differential slumped 2 cents Wednesday on a deadline day to ship barrels and as new data showed a stock build in the region.
Platts assessed Gulf Coast jet at NYMEX November ULSD futures minus 10.50 cents/gal, its lowest level since July 2.
Wednesday was a deadline day to schedule barrels on the latest shipping cycle for Colonial Pipeline, which runs from Houston to New York Harbor. Such scheduling days typically intensify trading patterns.
Six deals occurred in the Platts Market on Close assessment process, from minus 9.25 cents/gal to minus 10 cents/gal, with an offer left at minus 10.25 cents/gal by Morgan Stanley.
Morgan Stanley sold two of the 25,000-barrel lots, while Shell sold three and BP sold one. Trafigura was the main buyer, with four deals totaling 100,000 barrels, while Hess and Noble each bought 25,000 barrels.
The decline comes after Energy Information Administration data showed a 107,000 b/d decline in US production of jet fuel to 1.42 million b/d.
The Gulf Coast saw the biggest decline, down 81,000 b/d to 646,000 b/d. But the region added 618,000 barrels of inventory to 11.7 million barrels.
Other regional stocks declined. Total US jet fuel inventory fell 565,000 barrels to 39.93 million barrels.
IATA projecting growth
International freight volumes are expected to grow at a five-year compound annual growth rate of 4.1%, with the fastest growing routes, between the Middle East and Asia, expected at 6.2%/year, the International Air Transport Association forecasted Wednesday.
"An average of more than 4% growth for the next five years would be a marked improvement on the performance of recent years," said Tony Tyler, IATA's director general and CEO, in a statement. "Since 2011, for example, growth in freight tonnes has averaged just 0.63% per year."
In terms of market growth, the Middle East is forecast to be the fastest growing region with a CAGR of 4.7%, followed by Africa at 4.4%. Asia-Pacific and Latin America will be the joint third-fastest growing markets at 3.8%.
The US, China and the UAE will each be adding more than 1 million mt of freight by 2018 compared to today, with the UAE replacing Germany as the third largest market, IATA said.
"Despite the positive picture, the overall risks to the economic outlook, and therefore to air freight, remain towards the downside," Tyler said. "Trade protectionism is a constant danger. Geopolitical concerns, volatility of oil prices, and competition from rail and sea could also affect this forecast."
Significant volume imbalances are expected to continue according to the report, IATA said. The imbalance in flows from Asia to North America is estimated to be 1.1 million mt in 2018 and from Asia to the Middle East the imbalance is expected at 600,000 mt, it said.