L.A. Jet Fuel Basis Surges 20cts on El Segundo Flares


   
Kristina Davis
DTN Refined Fuels Market Reporter

   MIAMI, FL (DTN) -- Los Angeles jet fuel basis spiked on Monday (10/13) to a 
35cts premium over November NYMEX RBOB futures, 20cts up from the previous 
trading session, driven by tight supply fundamentals as ongoing flaring at 
Chevron's 269,000 bpd El Segundo refinery continues.

   The price surge reverses a two-month downward trend as L.A.  jet fuel basis 
traded at 2.25cts over the front-month RBOB futures contract in August, before 
slipping to a 9ct discount by early September amid ample supply.

   "The market definitely reacted to Chevron's issues," one trader said. 

   On October 2, a massive explosion affected El Segundo refinery's Isomax 
unit, which converts heavier gas oils into jet fuel and other middle 
distillates. The explosion also disrupted operations in other refining units 
and forced temporary shutdowns. Since then, Chevron has reported successive 
flaring events to the South Coast Air Quality Management District, while 
conducting internal reviews and investigations.

   The explosion, however, and the subsequent refinery disruptions have upended 
the jet fuel price trajectory, tightening regional inventory and spurring 
strong bids.

    El Segundo refinery, located west of Los Angeles International Airport, has 
logged four flaring events since August, including two in October. The most 
recent flare, which began October 12 at 12:00 a.m. PT, was again declared 
emergency flaring, with emissions estimated above 100 lb of volatile organic 
compounds, per the latest South Coast AQMD filing.




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