Los Angeles jet falls to nearly eight-month low after USWC imports nearly double

Los Angeles jet fuel fell 0.75 cents/gal to a nearly eight-month low Dec. 14 amid a contango market structure after imports to the US West Coast nearly doubled so far this week.

Platts assessed US West Coast jet fuel for Los Angeles pipeline at NYMEX January ULSD futures minus 17.50 cents/gal Dec. 14, the lowest since April 19, when the grade was assessed at an 18 cents/gal discount to ULSD futures and down $1.075 cents/gal from an all-time-high 90 cents/gal premium assessed on Nov. 22, according to S&P Global Commodity Insights data.

The USWC imported over 1 million barrels of jet so far this week, including over 434,000 barrels discharged at Los Angeles, California, on Dec. 10 and nearly 74,000 barrels at San Francisco on Dec. 13, according to S&P Global Commodity Insights data.

Nearly double what the region took the prior week when imports averaged 79,000 b/d, or around 553,000 barrels in the week ended Dec. 8, from none in the week prior, according to the latest Energy Information Administration data released Dec. 13.

"Padd 5 got all the imports but still barely led to a build on the West Coast," a US-based jet trader said Dec. 13.

USWC jet inventories rose by 124,000 barrels to 8.637 million barrels in the week ended Dec. 8 despite a drop in regional output by 35,000 b/d to 411,000 b/d over the same period, the EIA said.

Prompt Los Angeles jet for December loading was heard valued at a discount to January barrels Dec. 14, indicating a contango market structure at the USWC.

January Los Angeles jet was heard valued between February ULSD futures minus 5 cents/gal and plus 5 cents/gal Dec. 14. That was estimated between roughly 10 cents/gal and 20 cents/gal higher than prompt barrels on an outright basis Dec. 14.

An option for only Los Angeles International Airport barrels was heard valued flat to the normal pipeline barrels Dec. 14, which could indicate higher supply is converging the two prices.

California jet inventories fell for a second consecutive week to 2.788 million barrels in the week ended Dec. 8, down 35,000 barrels from the week prior and down 98,000 barrels from two weeks prior, according to the latest California Energy Commission data.

Statewide output rose over the same period to 2.242 million b/d the prior week, up 28,000 b/d from two weeks prior, and up 484,000 b/d from late November.

However, Northern and Southern California jet inventories the previous week were mixed since the week ended Nov. 24, rising 40,000 barrels to 1.710 million barrels and falling 138,000 barrels to 1.078 million barrels, respectively.