OREANDA-NEWS. April 10, 2017. Chicago jet fuel prices are rising on Explorer Pipeline maintenance work and amid allocation reductions designed to mitigate the effect of off-specification jet fuel filling area terminals.

Chicago jet fuel prices increased to $1.61/USG on 6 April from $1.53/USG at the beginning of the week, and were continuing to rise this morning. While some of the rise can be attributed to a roughly 4?/USG increase in the May Nymex ULSD contract price, the bulk of the price increase was driven by delayed jet shipments to Chicago because of planned maintenance that started 4 April.

But more significantly, Chicago jet buyers have had to source their supplies locally instead of shipping US Gulf coast jet up the Explorer pipeline to work the arbitrage that opened weeks ago. Specification issues surrounding the thermo-stability of jet shipments at some destinations along the pipeline, as well as issues surrounding the formation of insoluble particles when treating jet batches for metal content, have dogged the Explorer pipeline since 2015, the company told Argus. The company has been met with limitations on the capacity to store and further treat the off-specification jet fuel, and has to adjust allocations accordingly, according to market sources familiar with the matter.

Explorer maintains that it is operating under the same shipping constraints that have been in place for more than a year when the problem of excess off-specification jet fuel at certain terminals hit critical mass in 2015. At that time the company reduced shipping rates by 30-50pc from previous levels.

But one Chicago shipper reported an additional reduction in Explorer jet fuel line space allocation that took effect as recently as late March, a sign the storage space to treat the off-spec fuel has tightened.