April 22, 2014
The Los Angeles jet fuel differential climbed 2 cents Tuesday to its highest level in more than a year on talk of a turnaround at a major refinery next to Los Angeles International Airport.
Platts assessed Los Angeles jet fuel at NYMEX May ULSD futures plus 4 cents/gal, which is the highest differential since April 10, 2013, when it was plus 5 cents/gal, Platts data showed.
The differential has risen 10.50 cents since the beginning of the month, when traders first heard Chevron may work on a crude unit and hydrotreater later in April at its 290,000 b/d El Segundo refinery, which produces 112,000 b/d of jet and diesel and also supplies 40% of the fuel for Los Angeles International Airport. Chevron said it would not comment on refinery operations and continues to supply customers.
Some relief may come from the water, with sources and Platts cFlow vessel-tracking software citing several potential jet imports, including the Freight Margie from Russia to Los Angeles, capable of carrying 500,000 barrels.
Cargoes were also still heading to the East Coast, mainly from Venezuela to Florida, sources said. But the dynamics have changed in the last month from a drought to a glut of fuel.
"Tanks are full, it seems. There are loads of delays," one shipping source said of Florida. "I had a ship that was having trouble finding a home for its jet cargo last week."
Venezuela loaded six to eight jet cargoes this month, of which four to six were going to Florida, sources said. Ships also were seen heading from Asia through the Panama Canal likely carrying jet to Florida, including the STI Texas City and Glenda Melissa for Valero.
Given the glut, some of those cargoes may work their way up to New York, one source said.
New York barge jet differential gained 25 points to NYMEX ULSD minus 3.50 cents/gal, while Gulf Coast pipeline barrels rose 50 points to minus 5.50 cents/gal on a deadline day to schedule barrels for delivery into Colonial Pipeline.
Both markets were active Tuesday, with nine deals totaling 225,000 barrels in the Gulf Coast and six deals totaling 150,000 barrels in the East Coast. Morgan Stanley bought six of the pieces in the first region and sold five times in the latter.
Bearish Asian sentiment steady
Spot activity in the jet fuel/kerosene market in Asia was largely subdued amid steady demand/supply fundamentals, market sources said Tuesday.
Lackluster end-user requirements during the off-peak travel season coupled with a shut East-West arbitrage contributed to tepid trading activity.
According to data released Monday by IE Singapore, commercial onshore middle distillates stocks in Singapore -- Asia's main oil trading hub -- swelled to above 10.9 million barrels in the week ended April 16, compared with 9.76 million barrels in the previous week. The stocks include gasoil, jet fuel and kerosene.
Middle distillate exports from Singapore over April 10-16, meanwhile, fell to 70,481 mt, from 112,363 mt in the previous week, reflecting weak demand.
On the tender front, Kenya's Oil Industry Pipeline Co-ordination Secretariat is seeking two 62,420 mt cargoes of jet fuel for delivery over June 12-14 and June 25-27 into Mombasa. The tender closes on April 24, with one-day validity.
The Oil Industry Pipeline Co-ordination Secretariat last bought two 60,000 mt cargoes of jet fuel, for delivery over May 4-6 and May 18-20 into Mombasa, from Vivo Energy and Galana Petroleum at premiums of $10.19/mt and $11.81/mt, respectively, to the Mean of Platts Arab Gulf jet fuel/kerosene assessments, CFR.
In other news, China's domestic production of oil products showed mixed growth in March, even though overall refinery crude throughput was up 2.6% year on year to 41.92 million mt, or an average 9.91 million b/d, according to detailed monthly output data from the country's National Bureau of Statistics released Monday.
The country's jet fuel/kerosene output for the month surged 23.7% year on year to 2.44 million mt, an uptrend seen throughout the first quarter of this year.