USGC jet lowest since late April 2020
Airport traffic rebounds
An all-time high for the Renewable Volume Obligation price sent US jet fuel prices into a tailspin June 7, outweighing rising airline travel.
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Register NowS&P Global Platts assessed Gulf Coast jet fuel at NYMEX July ULSD futures minus 30.25 cents/gal, a 1.25-cent decline on the day. This marked the weakest assessment since front-month futures minus 32.50 cents/gal on April 29, 2020. The New York jet fuel differential on Buckeye Pipeline slipped 75 points/gal to futures minus 24.50 cents/gal, the lowest assessment since futures minus 31.50 cents/gal on May 1, 2020.
The RVO price has surged since the start of the coronavirus pandemic on a combination of factors. High soybean prices, high fuel imports into the US and uncertainty about federally set blending volumes have all helped boost the price to record 22.9683 cents/gal as of June 7.
Typically, a strong RVO price encourages more jet fuel production as refiners try to avoid the costly obligation for on-road fuels like diesel. That production increase can lead to lower jet fuel prices and higher diesel prices.
While the pandemic had disrupted that relationship because of significant demand destruction for jet fuel, the market's price relationships have started to normalize as air travel increases.
The last time the Gulf Coast and Buckeye differentials were this low, traveler throughput at US airports amounted to less than 200,000 individuals per day as the coronavirus fallout crushed air travel demand. More recently, however, throughput on June 6 totaled 1.99 million individuals, the strongest level since the outbreak of the pandemic.
USGC diesel remained more balanced, and was assessed at July futures minus 5 cents/gal, just 5 points lower than the previous assessment.
Diesel is the single largest refined product market — several times larger than jet fuel — and is thus less prone to volatile price swings. The benchmark has maintained a 10-point range the last six trading days.
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US jet fuel prices plummet to 13-month lows on record-high RVO - S&P Global
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