July 23, 2014
Jet fuel differentials on the US Atlantic Coast fell Wednesday, reversing recent upwards momentum as stocks rebounded.
Platts assessed the USAC jet fuel barge and Colonial Pipeline differentials at NYMEX August ULSD futures plus 5.25 cents/gal, 1.25 cents lower than Tuesday. Buckeye Pipeline jet fell more dramatically, shedding 3.50 cents to land at plus 5.50 cents/gal.
The recent high differentials in the USAC have left the arbitrage from the Gulf Coast wide open, which has lent some strength to the Colonial Pipeline space trade.
USGC jet fuel held steady at minus 4 cents/gal, bringing the spread to the USAC to 9.25 cents/gal, 1.25 cents lower than Tuesday, but still well over the 4.50 cent/gal Colonial Pipeline tariff.
Market sources said space on the Colonial Pipeline was trading at around minus 25 points/gal to free, which means that some line space sellers have been paying buyers to take the line space off their hands. This usually happens when a shipper over-nominates and needs to ship less product than they thought.
"Well, the line space was headed to minus 75 points/gal," one broker said. "But the jet rally up there seemed to salvage it."Higher stocks of jet fuel on the Atlantic Coast dampened the recent strength, though. Stocks in the week ended July 18 were 703,000 barrels higher than those in the week before, closing the week at 10.14 million barrels, according to Energy Information Administration data released Wednesday.
Platts assessed the NYMEX August ULSD futures contract at $2.8805/gal at 3:15 pm EDT.
European jet price differentials edged higher Wednesday, with buying to meet peak summer aviation demand visible into several locations.
Persistent buying interest was seen into Le Havre, Ghent, Isle of Grain and Hamble, and, while supply was on offer into Rotterdam, prompt availability was lacking.
Northwest European cargoes were assessed $1.50/mt higher at a $70.25/mt premium to ICE gasoil, while Mediterranean cargoes climbed $1.50/mt to be assessed at a $61.25/mt premium.
In the barge market, Shell was the most active buyer, with a total of 9,000 mt purchased from Vitol and KLM. German wholesaler Gekol also bought 2,000 mt from KLM.
Several fixtures were heard for voyages starting in the Persian Gulf and India for delivery to UK Continent. The King Douglas was chartered by Aramco Trading Company for a PG-UKC route, loading 65,000 mt August 4, at $2.17 million, shipbroker data showed.
BP lined up the Flagship Violet for a Sikka-UKC voyage, loading 63,000 mt August 12, at $2.1 million. The major also lined up another tanker for a PG-UKC voyage, loading 90,000 mt mid-August, at $2.75 million. The tanker was yet to be nominated.
Total was heard to have been awarded the latest tender from India's Mangalore Refinery and Petrochemicals Ltd. The 40,000 mt cargo of Jet A-1 is for loading September 5-7, and was secured at a discount of around 70 cents/barrel to the monthly average of Mean of Platts Singapore jet fuel/kerosene assessments, FOB, the company said.
MRPL last sold 40,000 mt of jet A-1 loading over July 24-26 to BP at a discount of about $1.05/barrel to the monthly average of MOPS jet/kerosene assessments published in July, on an FOB basis.
Asian barrels heading elsewhere
The absence of jet fuel/kerosene demand in Asia has encouraged sellers to divert barrels to other regions.
Market sources said North Asian suppliers have been selling cargoes to the West, mainly the US, where buying was seen to be stronger due to low stocks.
US West Coast jet stocks at 7.97 million barrels last week were 15% below the five-year average, according to US Energy Information Administration data released Wednesday.
South Korean refineries recorded higher outflows in June at 7.93 million barrels, up from 7.5 million barrels in May, data released Tuesday by state-run Korea National Oil Corp. showed.
South Korea's domestic requirements for the middle distillate fell by 2.2% month-on-month to 2.66 million barrels.
Asia remains bearish, keeping Singapore cash differentials in negative territory since May.
Going forward, jet fuel demand is likely to remain lackluster until end of the year when heating demand kicks in.
Mangalore Refinery and Petrochemicals Ltd. has sold 40,000 mt of jet fuel for loading from New Mangalore over September 5-7 at a discount of around 70 cents/b to Mean of Platts Singapore jet fuel/kerosene assessments, FOB. The buyer was heard to be Total Trading.
The Indian refiner last awarded its tender for 40,000 mt of jet A-1 loading July 24-26 to BP at a discount of around $1.05/b to the monthly average of Mean of Platts Singapore jet fuel/kerosene assessments, FOB basis.