US spot jet fuel prices increase on higher heating oil futures

03 April 2012 22:08  [Source: ICIS news]

HOUSTON (ICIS)--Spot prices for US jet fuel on the US Gulf and east coast have risen in the past week, affected by higher rates for one of their main drivers, heating oil futures, sources said on Tuesday.

A spot trader said it was not clear whether jet fuel demand has picked up because the fuel’s absolute price is largely influenced by the volatility of heating oil futures, which do not require investors to handle the physical product.

When heating oil futures’ trading on the NYMEX switched to May as the prompt month on 2 April, more buyers entered the market, causing prices to rise.

On 27 March, US Gulf jet fuel was at $3.2650-3.2675/gal and its east coast counterpart ranged from $3.3075-3.3100/gal. On Tuesday, US Gulf and east coast jet fuels were priced at $3.2825-3.2850/gal and $3.3275-3.3300/gal, respectively.

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

As production of jet fuel on the east coast has dropped with recent refinery shutdowns, the region has received much of its stocks from the US Gulf. Accordingly, when the fuel’s Gulf coast premiums change, the east-coast values are following.

Premiums in the US Gulf hit highs on 2 April, jumping to 6.50 cents/gal, up from 4.75 cents/gal on 27 March. New York Harbor premiums were at 10.00 cents/gal on Tuesday, up from 9.00 cents/gal on 27 March.

By: Anna Matherne

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