US Atlantic Coast jet fuel differentials rose over a penny on Wednesday to 13.50 cents/gal over the NYMEX March heating oil contract as the East Coast market reacted to demand for the fuel on the Gulf Coast as well as concern over the situation in Libya.
The rise on Wednesday put the differential up 100% from the start of February, when it was assessed at 6.75 cents/gal over the NYMEX contract, according to Platts' analysis.
"The allocation is in the pipeline and not a lot has been shipped to New York," said a New York-based trader.
Tuesday was the scheduling day for the latest shipping cycle on Colonial Pipeline, the main artery for shipping the fuel from the USGC to the East Coast.
"The Gulf Coast is strong and [the market] is worried about Libya," said the trader.
New York Harbor-basis jet fuel had already hit a 14-month high on Tuesday when it was 12.375 cents/gal over the March heating oil contract before it hit the new high Wednesday morning.
With the new high and the NYMEX March heating oil contract trading at the time at $2.8810/gal, the move Wednesday put the flat price for the fuel at $3.016/gal, its highest level since October 1, 2008, when it was $3.1019/gal.
In addition to allocations on the Colonial Pipeline being full, other traders said demand was high in the USGC due to an open arbitrage opportunity.
"USGC traders are exporting (to Europe) right now if they can make the spec," a second trader said.
European jet fuel uses tougher specifications for jet fuel, mostly related to a higher freezing point. Sources said BP, ExxonMobil and Valero are among the refinery that may be able to make it, and BP was heard buying last week for possible export.
