At least 90,000 tonnes of jet fuel are set to be shipped from Asia to the US West Coast from late August to fill a supply shortfall after a fire closed a crude unit at California's second-largest refinery, traders and shipbrokers said on Wednesday.
Morgan Stanley and Chevron have each fixed a medium-range vessel to carry about 30,000 tonnes of jet fuel, to be loaded from South Korea in early September, headed to the US West Coast, they said.
Royal Dutch Shell, BP and Vitol are also set to ship jet fuel cargoes on that route, traders said.
The shipping fixtures, however, could not be confirmed with the relevant companies.
Chevron's 245,000-barrel-per-day (bpd) refinery in Richmond, California, may be shut for at least four to six months after a major fire at its crude distillation unit last week, industry intelligence group IIP Energy said in a report that suggested the outage might be twice as long as feared.
While the refinery is continuing to produce about 50 percent of its capacity for transport fuel while the CDU is shut, traders expect a shortage of oil products over the next few months in the region.
Profitable arbitrage economics to ship jet fuel from North Asia to the US West Coast would also mean an increase in cargoes on that route over the coming weeks, traders have said.
Prior to the fire, only about 30,000 tonnes of jet fuel was shipped from Asia to US West Coast every month, a Singapore-based trader said. The term cargoes are sometimes sent to airlines based in Hawaii, Alaska and Vancouver which usually land on the US West Coast.
Jet fuel spot cargoes usually move from South Korea to the US West Coast only about three to four times a year, a trader said earlier.
Most South Korean refiners have sold out their jet fuel cargoes for September amid supply constraints elsewhere in the region after refinery maintenance increased demand, they said.
But the situation should improve from October with some Asian refineries expected come back online.
The improved profitability of the Asia-US route also comes as European demand for jet fuel is set to fall with the end of peak summer demand and the Olympic Games in London, traders said.
"I think some of the companies will now start to send jet fuel mostly to US West Coast, instead of to Europe," a North Asian trader said.