[SAN FRANCISCO] The latest wave of tankers carrying jet fuel from Asia to Los Angeles are set to begin arriving in early June, according to ship tracking data, supplies that should keep a lid on wholesale prices after their dramatic run-up earlier this month, traders said.
The Neptun D, a 60,000-tonne Panamax tanker that loaded up on jet fuel in Ulsan, South Korea, earlier this month is expected to dock in Los Angeles on June 3, according to Thomson Reuters Eikon ship tracking data.
It will be followed by FPMC 18, a 35,000-tonne tanker that was loaded with jet fuel in Daesan, South Korea, this month and is expected to dock in Los Angeles on June 11.
The 60,000-tonne Lilac Victoria tanker left Singapore on May 24 and is expected to arrive in Hawaii on June 10 for orders and could ultimately head to Los Angeles with additional jet fuel, data shows.
The vessels come after cargos of jet fuel from Asia arrived at Valero Energy Corp and Chevron Corp refineries in the last 10 days, traders said. Gasoline shipments from Asia are also expected next month amid ongoing in-state refinery issues, traders said.
Despite the deliveries, jet fuel inventories in the region slipped by 100,000 barrels to 7.56 million barrels for the week ended May 22, according to the Energy Information Administration.
The fleet of vessels carrying jet fuel from Asia comes after May-delivery wholesale jet fuel in Los Angeles was offered as high as 75 cents a gallon over June heating oil futures on May 15, their highest price since December 2006, according to the California Energy Commission. "Those prices opened up the flood gates," one trader said on Friday.
After those desperate to purchase product were squeezed and fuel from Asia began arriving earlier this month, prices began to subside.
On Thursday, June-delivery LA jet fuel traded just once for 12 cents a gallon over July heating oil futures. No jet fuel deals were done on Friday.
Another trader said that while companies sometimes overreact to a shortage by importing more than the market requires, that may not be the case this time around. "A lot of these cargoes will be needed," he said. "Demand will stay up and production will stay down with the Exxon problem," he said, referring to ongoing production issues at the Exxon Mobil Corp's refinery in Torrance, California, which suffered an explosion in February.