Thin exports could add to US jet fuel surplus

US jet fuel stockpiles that are already at a 14-year high for August could build even further if exports continue to lag.

Waterborne jet fuel loadings from the US Gulf coast are on pace for the lowest monthly average since March 2021 at 32,800 b/d through the first 20 days of August, according to oil analytics firm Vortexa. Departures are down by 31pc from the same period last year and lag behind average daily July volumes by 71pc.

This month's drop in export loadings follows a July in which Gulf coast jet fuel discharged in other countries trailed year-earlier levels by 25pc.

US Gulf coast jet fuel discharged in Mexico last month was down by 7.6pc from July 2023, while arrivals in Mexico through the first 20 days of August are so far little changed from August 2023. US Gulf coast jet fuel deliveries in Canada this month are down by 25pc on the year, Vortexa data shows.

The dip in Gulf coast exports could add to US supplies at a time when domestic jet fuel demand may taper as the summer travel season nears its end. Passenger screenings at US airports fell to an 11-week low last week, according to US Transportation Security Administration data.

Falling demand and building inventories helped sink US jet fuel prices to multi-month lows on Monday as front-month Nymex diesel futures fell by 2.8pc. Colonial Pipeline jet fuel at the Gulf coast fell on Monday by 7.45¢/USG to $2.12/US and Buckeye jet fuel prices at the New York Harbor shed 7.27¢/USG to $2.17/USG, both the lowest since May 2023.

Jet fuel stocks swell in August

Total US jet fuel stocks during the week ended 9 August swelled by 12pc to 46.24mn bl, the highest for any August week since 2010, according to the latest estimates from the US Energy Information Administration (EIA). Still, US inventories have eased by nearly 2pc since peaking in late July at 47.18mn bl, the highest for any week since October 2018.

Inventories have climbed across much of the US, with stocks in the Atlantic coast, Gulf coast, and west coasts notching multi-year highs for August weeks. Atlantic coast jet fuel inventories in the week ended 2 August were the highest for August since 1990 at 13.13mn bl, while Gulf coast stocks in the following week reached a three-year high for August at 14.26mn bl. In the US west coast, jet fuel stocks were the highest for any August week in at least 34 years at 11.82mn bl the week ended 9 August, EIA data show.

The US midcontinent is the lone US region where inventories are down on the year, as refinery issues have stunted production in the Chicago, Illinois, area. ExxonMobil's 252,000 b/d Joliet refinery in Channahon, Illinois, reported a process unit upset from 17-18 August, extending weeks of issues stemming from a power outage in mid-July. This has prompted viable arbitrage economics between the US Gulf coast and Chicago since 25 July, with Chicago prices averaging a 16.91¢/USG premium to the Gulf coast during that stretch. The arbitrage opportunity for sending Gulf coast jet fuel to the New York Harbor has been closed on paper since 13 August.

By Jared Ainsworth