US spot jet fuel prices increase on higher heating oil futures

07 February 2012 23:04  [Source: ICIS news]

HOUSTON (ICIS)--The spot prices for US jet fuel on Tuesday increased by more than 30 cents/gal from 3 February on the US Gulf and east coast, prompted by higher heating oil futures, which is a main driver in spot jet fuel prices.

The absolute price of jet fuel is largely influenced by the volatility of heating oil futures, where investors do not handle physical product.

On 3 February, US Gulf jet fuel was at $3.14253.1450/gal and east coast jet fuel ranged from $3.18003.1825/gal. On Tuesday, US Gulf and east coast jet fuel were priced at $3.20253.2050/gal and $3.25503.2575/gal, respectively.

The spot market premium for jet fuel reflects traders’ views for jet fuel market fundamentals for moving physical product.

On 1 February, the US Energy Information Administration (EIA) reported that US Gulf jet fuel stockpiles gained 1m bbl/day to reach 13.6m bbl during the week of 27 January.

Since then, the premium for jet fuel over the heating oil futures contract has declined.

The US Gulf jet fuel premium fell to 1.25 cents/gal on Tuesday from 3 cents/gal one week earlier on 31 January.

As production of jet fuel on the east coast drops with recent refinery shut downs, the region receives much of its jet fuel from the US Gulf. Accordingly, when jet fuel premiums on the Gulf coast change, the east coast values follow.

Premiums on the New York Harbor fell to 6.5 cents/gal on Tuesday from 7.5 cents/gal on 31 January.

By: Anna Matherne

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