LA Jet Basis Drops 35cts on Eased Supply Fears

MIAMI, FL (DTN) – Los Angeles jet fuel basis values dropped on Tuesday (5/19), marking a sharp reversal from the historic highs recorded in April as immediate supply fears eased and demand side support softened. 

Prompt Los Angeles jet fuel basis traded Tuesday at a 20cts discount to June NYMEX ULSD futures, down 35cts from where it was last assessed Monday at a 15cts premium.
The latest move extends a steep correction from the record $1 gallon premium reached in mid-April, when refinery outages, tighter crude supply linked to the Iran war and reduced West Coast refining capacity triggered an unprecedented rally in the market.

At the height of the rally during the week ending April 17, Los Angeles jet fuel surged by 57cts overall, including a 32cts jump in one session followed by another 15cts increase the next day. The differential eventually broke into triple-digit territory for the first time on record, peaking at a $1 premium above NYMEX ULSD futures.

The weakening in Los Angeles jet fuel basis occurs despite the Energy Information Administration reporting a draw of that product last week.

Jet fuel stocks in the West Coast fell by 400,000 bbl to 10.6 million bbl during the week ended May 8, and were unchanged from a year ago, the agency said.