Houston — The US Gulf Coast jet fuel differential dropped Monday to its lowest level in nearly six months after demand softened in the wake of Hurricane Florence, sources said.
S&P Global Platts assessed benchmark Gulf Coast jet fuel on the first day of trading for Colonial Pipeline's prompt 54th cycle at the NYMEX October ULSD futures contract minus 8 cents/gal, down 55 points from Friday. The last time it was assessed lower was March 21, when the assessment was the front-month futures minus 8.25 cents/gal on March 21.
"Colonial is running at full capacity despite Florence. Shoving barrels into markets flooded by the storm will absolutely cause differentials to fall on all products, as demand last weekend was ravaged by the storm," said one USGC distillates trader.
Jet fuel supply was strong even before Florence developed into a hurricane last week, causing thousands of canceled flights.
The latest Energy Information Administration data showed nationwide jet inventories rose 2.35 million barrels to 44.34 million barrels, the highest mark seen since June 2, 2017 when EIA reported stocks totaled 44.60 million barrels. US jet production was also strong, climbing 43,000 b/d week on week to 1.93 million b/d, EIA said.
"Jet is very heavy in the market. Demand has cooled off," said another trader.
