USGC jet fuel stocks highest in nearly 5 years

OREANDA-NEWS. July 30, 2015. Strong production rates pushed Gulf coast jet fuel stocks to their highest level in nearly five years, according to the Energy Information Administration (EIA).

Gulf coast inventories rose by 1.1pc to 17.5mn bl for the week ending 24 July, reaching their highest since a period between July and October 2010, when air traffic suffered from the impacts of a global recession. Prior to that, Gulf coast stocks only once moved beyond 17.5mn since the beginning of the EIA records in 1990, which occurred in January 1995.

Gulf coast inventories receive support from strong refinery runs, as cheap prices for crude oil and comparatively high prices for refined products bolstered refinery margins to levels not seen in eight years. The Gulf coast 3/2/1 crack spread, or the premium of Colonial gasoline and diesel over Light Louisiana Sweet (LLS) crude, has been over \\$20/bl since late June, the first time the spread consistently broke the mark since the summer of 2007.

Implied US jet fuel demand remained stable at 1.71mn b/d. The strong level was one contributing factor to shrinking stocks on a national level, which moved lower by a slight 0.2pc to 44mn bl following ten consecutive weeks of increasing values.

The reduction was largely caused by a 7pc stock draw on the Atlantic coast, where regional imports fell by 103,000 b/d to 44,000 b/d.

West coast jet fuel stocks rose by 7.7pc to 9.3mn bl, as regional refinery utilization picked up by 0.4pc to a three-year high at 92.1pc.

Midcontinent inventories held stable at 6mn bl.

US export estimates remained steady at 144,000 b/d. While global demand remains strong for US distillates, the smaller jet fuel market lacks the ability to quickly clear large volumes into overseas outlets. As the export market fails to keep up with strong production levels, Gulf coast jet fuel stocks keep on building.