LA Jet Fuel Basis Edges Higher on Supply Tightness


   
Kristina Davis
DTN Refined Fuels Market Reporter

   MIAMI, FL (DTN) -- Prompt Los Angeles jet fuel basis strengthened Tuesday 
(5/26), with trades confirmed higher in the spot market even as West Coast jet 
fuel inventories and imports increased during the latest reporting week.

Los Angeles jet fuel traded twice during the session, first at a 10.5cts 
premium and later at a 13cts premium to June NYMEX ULSD futures. The final 
trade placed the basis 5cts above Monday's (5/25) last pegged level.

The market move followed weeks of elevated volatility in Los Angeles jet fuel. 
Earlier this month, the basis climbed by 15cts on May 5 to a 60cts premium 
after rebounding from a sharp correction that followed the historic $1.10 
gallon premium reached in late April , the highest level ever recorded for the 
market.

According to U.S. Energy Information Administration data for the week ended May 
15, jet fuel inventories in the West Coast region increased by 400,000 bbl to 
11 million bbl and stood 200,000 bbl above the same week last year.

Jet fuel imports into the region surged by 64,000 bpd to 89,000 bpd during the 
profiled week and were 65,000 bpd higher year over year, suggesting additional 
barrels continued arriving into the West Coast market amid ongoing supply 
concerns.

Despite the inventory and import increases, traders continued to cite 
constrained refining capacity as a key factor underpinning jet fuel values. The 
shutdown of Phillips 66's 139,000 bpd Los Angeles refinery and the ongoing 
idling process at Valero's 145,000 bpd Benicia refinery have reduced regional 
fuel production flexibility heading into peak summer travel demand.




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