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Jet Fuel Rally in New York Seen Ending as Cargoes Restore Supply

A rally in New York jet fuel prices was seen coming to an end as tankers deliver supplies and rebuild stockpiles that had slid to a record seasonal low.

Jet fuel in New York Harbor, the trading center for the U.S. East Coast, was 13.95 cents a gallon above diesel futures traded on the New York Mercantile Exchange at 1:51 p.m. New York time today, data compiled by Bloomberg show. The fuel rose as high as 31 cents over futures Sept. 2 as holiday travel cut into already-low inventories. At least 10 tankers are scheduled to load fuel in the next week for delivery to the East Coast, ship-fixture data compiled by Bloomberg show.

At least four cargoes of jet fuel were offered in the New York Harbor spot market yesterday “with no bids,” Eric Rosenfeldt, vice president of sales and risk management for petroleum marketer Papco Inc. in Virginia Beach, Virginia, said by telephone. “The party is winding down.”

The shrinking fuel supplies ahead of the Sept. 1 Labor Day weekend triggered the biggest rally in New York jet fuel since 2008. Carriers including American Airlines Group Inc. and Southwest Airlines Co. agreed to limit the fuel they take from the region’s John F. Kennedy International Airport, a hub for air travel that sees about 50 million people annually.

The 16.63-cent rally versus futures last week was the biggest since the week ended Sept. 12, 2008, when it jumped 32 cents.

Lower Supplies

Inventories of the aviation fuel in the eastern U.S. slid 8.3 percent in the seven days ended Aug. 29 to 8.1 million barrels, the lowest for that period since at least 1990, data compiled by the Energy Information Administration show.

Airlines are managing flights without disruption and are coordinating with each other and the Port Authority of New York & New Jersey, which manages the area’s airports, on the fuel supply situation as they wait for supplies from abroad to arrive, Vaughn Jennings, a spokesman for the Washington trade group Airlines for America, said by e-mail.

“Bottom line is that it does take time for airlines to build their inventory, particularly if imports are coming from overseas,” he said.

Ship broker Poten & Partners has seen a “significant” pick-up in jet-fuel tanker deliveries to the U.S. this year, Erik Broekhuizen, the company’s head of marine research, said by telephone from New York yesterday.

“There has definitely been more jet fuel moving in 2014 than in 2013, more than double what we saw last year in reported fixtures, and that’s only a fraction of the market,” Broekhuizen said. “Whether that’s because U.S. refiners are making something else or there’s been a strong pick-up in airline traffic, I don’t know.”

Jet fuel demand is at the highest seasonal level since 2007, EIA data show. The total supplied in the U.S. averaged 1.57 million barrels a day in the four weeks ended Aug. 29, up from 1.55 million a year ago.

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