11 Sep 2020 Featured in: Americas Weekly - Issue 36

Research Highlights - Week 37

Bloated USGC distillate inventories are partially behind recent regrade strength (see Americas Weekly – Issue 36).

  • The first week of September saw nationwide jet fuel inventories in the US fall below the lower end of the 5-year range for the second time ytd amid still heavily subdued production.

  • This comes as the regrade in PADD-3 has moved into positive territory – sending the strongest signal to up jet supply since January – in contrast with the regrade in other refining regions. Strength in PADD-3 might stem from excessive pressure on USGC distillate markets, as inventories there remain well up y-o-y.

  • That said, US refiners are likely to be cautious when it comes to ramping up jet fuel production, with a positive regrade signal likely needed for some time before we would see sizeable yield-shifting back towards jet.