JET: US Spot Prices Ease as No.2 Oil Futures Glide Lower

    

   BURLINGTON, Vt. (DTN) -- Spot jet fuel prices in regional U.S. markets 
drifted lower Thursday afternoon in light cash trading, pressured by a moderate 
retreat in heating oil futures traded on the New York Mercantile Exchange. 

   NYMEX heating oil futures rallied at the market open but lacked effective 
follow through buying this afternoon, drifting lower into the market close. 
Noncommercial market speculators were stymied by mixed signals given by an 
advance in equities and moderate bounce in the U.S. dollar. 

   October No.2 oil futures traded to a $2.1067 gal intraday high this morning 
but reversed gears this afternoon, settling down 1.33cts at $2.0604 gal. 
November heating oil futures tumbled 1.59cts to $2.0899 gal at settlement and 
the December contract ended the day down 1.79cts at $2.1133 gal. The trio of 
near-term contracts was drifting lower at press time in aftermarket trading on 
the electronic Globex system. 

   Gulf Coast 54-grade jet fuel improved 100pts in cash differential to a 
1.5cts futures premium as trading rolled over to Colonial Pipeline's 52nd cycle 
that limited spot price to a 0.33cts futures-related loss at $2.0834 gal. 

   Los Angeles September LAX pipeline jet fuel traded prompt at an 8.25cts 
futures premium that pared spot price by 1.71cts to $2.1509 gal. Spot jet fuel 
prices in Pacific Northwest and San Francisco Bay area cash markets remained 
indexed at par with those in the Los Angeles Basin. 

   Spot jet fuel in New York Harbor was talked either side of a 5.0cts futures 
premium for prompt cycle Buckeye Pipeline transport that backed spot price down 
0.83cts to an implied $2.1184 gal.

   Group 3 Q-grade moved 1.33cts below its Wednesday closing range to a 
notional $2.1259 gal, talked for prompt Magellan Pipeline delivery in a wide 
5.0cts to 6.5cts bid/ask range over the MERC. Chicago 51-grade was rated at a 
5.75cts MERC premium for generic second cycle September pipeline delivery that 
trimmed implied spot price 1.33cts to $2.1259 gal.

   In other news, the Energy Information Administration reported a moderate 
400,000 bbl week-over-week drawdown in commercial U.S. jet fuel stocks to 47.9 
million bbl during the week-ended Sept. 3 that set current reserves at a 2.5 
million bbl surplus versus the comparable period a year ago. 

   U.S. refiners increased jet fuel production by 16,000 bpd to 1.439 million 
bpd, and boosted refinery utilization by 1.2 percent to 88.2 percent of 
capacity. Jet fuel imports improved by 25,000 bpd to 94,000 bpd and jet fuel 
exports remained steady at 56,000 bpd during the week under review. Implied 
demand over the last four weeks is up 0.8 percent versus same four-week period 
last year.

   On the supply side, jet fuel held in inventory in the Gulf Coast PADD 3 
region eased 200,000 bbl to 18.3 million bbl, and now ranges 2.4 million bbl 
above stocks in the comparable 2009 period. Jet fuel reserves along the U.S. 
East Coast drifted down 100,000 bbl last week that reset PADD 1 storage levels 
at 11.3 million bbl, and at a 1.2 million bbl year-over-year supply deficit. 
West Coast jet fuel stockpiles increased by 400,000 bbl to 10.2 million bbl and 
outpace year prior stocks by 1.4 million bbl. Jet fuel inventories in the 
Midwest were down 500,000 bbl versus week prior at 7.3 million bbl and range a 
nominal 300,000 bbl below year prior stockpiles. 

   G.Bud deGorgue, 1.802.524.1784, bud.degorgue@telventdtn.com, 
www.telventdtn.com. (c) 2010 Telvent DTN. All rights reserved.