October 1, 2014
US jet fuel differentials firmed Wednesday after new data showed production dropped last week.
Platts assessed Gulf Coast jet up 1.25 cents to NYMEX November ULSD futures minus 2.75 cents/gal on a new shipping cycle for Colonial Pipeline, which runs from Houston to New York Harbor.
New York barges slipped 25 points to minus 25 points/gal. Los Angeles jet gained 25 points to minus 3.50 cents/gal, Group 3 out of Oklahoma edged 50 points higher to minus 10 cents/gal and Chicago was unchanged at plus 3.50 cents/gal.
Energy Information Administration data released Wednesday showed US jet fuel production fell 126,000 b/d last week to 1.55 million b/d, in line with the year-to-date average. Output just three weeks earlier had reached a high since June 2005, slipping only slightly the following two weeks.
The Gulf Coast saw the biggest weekly decline for the week ended September 26, down 105,000 b/d to 712,000 b/d.
The growth in stock building also slowed from a sharp pace, climbing only 193,000 barrels on the week to 40.53 million barrels.
Gulf Coast jet fuel slipped 1.75 cents below Gulf Coast ULSD, the first such discount since August 6, as ULSD rose on a 2.5-million-barrel drop in US stocks to 106.97 million barrels.
Gulf Coast jet has averaged a 3.85-cent discount to its ULSD counterpart since the NYMEX contract switched in April 2013 to a ULSD basis from the lesser-quality heating oil grade, Platts data showed. Before then, jet fuel was typically at a premium, as it has been for most of August and September.
Singapore premiums stronger
Healthy buying interest for jet amid scheduled turnarounds and production cutbacks at several regional refineries continued to boost sentiment in the Asian jet fuel/kerosene market.
The uptick in demand for the middle distillate propelled cash differentials for cargoes loading from the main trading hub of Singapore to hit a near 33-week high of plus 50 cents/barrel to Mean of Platts Singapore jet fuel/kerosene assessment on Tuesday.
Premiums backed off slightly Wednesday to a still-strong plus 28 cents/b. But this is well above the 30-day moving average of just 13 cents/b.
Reflecting the firmness, the balance October/November jet fuel/kerosene paper time spread flipped to a backwardation of 3 cents/b.
Going forward, sources noted that the jet fuel/kerosene market could likely remain supported by heating oil demand, ahead of winter season in the Northern Hemisphere.
JX Nippon Oil & Energy for one, has seen steady overseas demand for stockpiling kerosene ahead of demand for winter heating oil, a company official said Tuesday.
Winter heating oil demand typically peaks over December-February in North Asia.
Separately in other news, Vietnam's state-owned Petrolimex, which accounts for more than half of domestic oil product sales, cut its prices by 0.6-1.8% effective Tuesday to reflect recent movements in international oil markets, according to a statement on the company's website.
The price reduction, the seventh since July 18 this year, was approved by Vietnam's Ministry of Finance, the company said. On the kerosene portion, prices were cut by 1.5% to Dong 21,350/liter.
Most other oil companies in Vietnam typically make the same price adjustments as Petrolimex, resulting in almost uniform prices nationwide. Domestic oil retailers last cut 0.6-1.2% off their diesel, kerosene and fuel oil prices but kept gasoline rates unchanged on September 19.
Around 70% of Vietnam's oil product demand is met by imports, with the remainder supplied by the country's sole 130,000 b/d refinery at Dung Quat.