SAN FRANCISCO (Reuters) - Wholesale jet fuel prices in the Los Angeles market remained high on Monday due to maintenance issues at refineries along the West Coast, prompting shipments from Korea and Japan that are expected to arrive in early June, traders said on Monday.
Jet fuel in the L.A. market was bid at 50 cents per gallon over June NYMEX heating oil futures on Monday with no traders willing to sell at that price, traders said. An offer of 75 cents a gallon over futures seen on Friday was the highest since December 2006, according to the California Energy Commission (CEC).
The price surge is due to low supplies caused by planned maintenance at Chevron’s El Segundo refinery, BP’s Cherry Point refinery in Washington state, and the Phillips 66 Wilmington refinery, traders said on Monday.
The unplanned outage of a crude unit at Exxon Mobil’s Torrance refinery, which is already operating without its primary gasoline-making unit after an explosion rocked the facility in February, has further constrained jet fuel supply, traders said.
“Even though cargoes came here in May, inventories are lean and nobody is selling,” one California-based jet fuel trader said on Monday.
Jet fuel production from California refineries was just over 2 million barrels for the week ending May 8, down nearly 1 percent from output one month ago, according to the CEC. Jet fuel stockpiles fell 2.4 percent over the same time period.
The shortage of jet fuel is part of a wider tightness in the California fuels market, where recent high gasoline prices are also attracting imports, experts said.
Two gasoline cargo ships are currently off the coast of Long Beach and Los Angeles waiting to offload, and there are three to four additional shipments on their way, said Gordon Schremp, a senior fuels analyst with the CEC.
“The market is working,” Schremp said. “A very large price signal has opened up an arbitrage opportunity and has attracted gasoline cargoes and component cargoes from across the Pacific, Europe and Eastern Canada,” he said.
Regular gasoline averaged $3.82 a gallon in California on Monday, more than a dollar more than the $2.71 average seen elsewhere in the country.
“We haven’t needed to import a lot of gasoline whatsoever from foreign sources for over five years,” Schremp said. “So that’s another indication that the gasoline market is pretty tight here and will remain tight until these major turnarounds get wrapped up.”
Reporting by Rory Carroll