18 January 2011 19:31 [Source: ICIS news]
HOUSTON (ICIS)--US jet fuel prices have continued to rise despite the cancellations of about 9,000 flights at US airports last week, a trader said on Tuesday, as tight supply and refinery outages appear to be steering the market.
Differentials for US jet fuel, based against prompt-month NYMEX heating oil, increased by about 2% last week in the northeast, where the most cancellations of flights were seen in cities including New York and Boston.
Meanwhile, in the US Gulf coast region, prices strengthened to a premium of about 2.0-5.0 cents/gal to heating oil in the week ended 18 January. That was after prices were at a discount to heating oil in early January.
Traders speculated that the price of US Gulf differentials strengthened as the New York Harbor (NYH) purchased more fuel from the Gulf coast to be delivered to the east coast via the Colonial Pipeline. That likely resulted from increased fuel demand on the east coast, the sources said.
Overall, at least 9,000 US weather-related cancellations were reported from 10 January to 12 January, as reported by individual airports. Winter storms swept much of the eastern US during that week.
Analysts in the jet fuel industry remained puzzled as to the continued increase in jet fuel prices through late December and January. In December, both east coast and Gulf coast differentials were trading below the futures price for heating oil.
Tight supply for refined products has plagued the east coast, sources said, owing to delayed deliveries along the Colonial Pipeline. Partial refinery outages also increased the load on the pipeline and caused back-ups for product.
Most recently, sources said there were significant outages at Sunoco’s Point Girard complex in Philadelphia, Pennsylvania, at Irving Oil’s New Brunswick refinery in Canada and Hovensa’s St Croix refinery in the Caribbean, which feeds the New York Harbor.
But even so, many market participants argued that those problems should not be severe enough to keep prices rising, considering the flight cancellations.
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