Winter storm dents US travel, lifting East Coast distillate prices to multi-month highs

US flight cancellations and delays mounted and roadways became hazardous in the Mid-Atlantic and Ohio Valley on Jan. 6, where Winter Storm Blair left a flurry of snowfall and freezing temperatures that lifted prompt distillates prices.

US flight cancellations totaled 1,904 as of 1:30 pm CT on Jan. 6, rising from 1,816 cancellations on Jan. 5, according to FlightAware data.

Reagan National Airport in Washington DC led nationwide disruptions midday Jan. 6, with cancellations standing at 261 outbound flights, 65% of the total, and 213 inbound flights, 53% of the total, as of 1:30 pm CT.

Washington Dulles International Airport canceled 30% or 117 inbound flights and 22% or 90 inbound flights, while Baltimore/Washington International Airport canceled 43%, or 125, of inbound flights and 42%, or 116, of outbound flights, according to FlightAware data as of 1:30 pm CT.

"Snow continues to fall at the airport," according to a Dulles International Airport press release at 11 am ET on Jan. 6 "The airport snow team is onsite for the duration of the storm."

Winter Storm Blair is expected to produce 6 to 12 inches of snow across the Mid-Atlantic, including the Washington DC metro area, according to the National Weather Service.

Flight cancellations were measured above 30% at multiple Midwest and East Coast Airports on Jan. 6, including 49% at St. Louis Lambert International, 36% at Kansas City International, 39% at Cincinnati/Northern Kentucky International and 31% at Richmond International Airport, according to FlightAware outbound flight data as of 1:30 pm CT.

"A significant storm over the Ohio Valley will move eastward off the Mid-Atlantic Coast by Monday evening," the NWS said early Jan. 6, noting travelers should expect significant disruptions.

The NWS also forecast 2-4 inches of snow will fall across portions of the Ohio Valley and Central Appalachians on Jan. 6.

Jet differentials rise to multi-month highs

"From what I've seen so far, [the storm] is more impactful on demand than any lost supply," a US-based jet trader said on Jan. 6, as no refinery issues have been reported.

Platts, part of S&P Global Commodity Insights, assessed US Atlantic Coast jet for Buckeye Pipeline, near New York Harbor, at NYMEX February ULSD futures minus 0.75 cent/gal on Jan. 6, up 3 cents on the week to the narrowest discount since July 23, 2024, when Platts published the same differential.

The prompt NYMEX ULSD futures contract, underpinning domestic distillates trade, settled at $2.3552/gal on Jan. 6, rising 5.57 cents/gal on the week to reach the highest level since Oct. 7, 2024, when the front-month contract settled at $2.3962/gal.

"Demand for heating oil is good and steady," a US distillates trader said Jan. 6. "It should stay that way."

The East Coast ULSD benchmark for barrels off Colonial Pipeline's Line 3 conduit near New York Harbor, was assessed at NYMEX February ULSD futures minus 0.25 cent/gal on Jan. 6, the highest level since Nov. 12, 2024, when the grade stood flat to the prompt futures contract.

Distillates prices had rallied in the week ended Jan. 2 ahead of the winter storm, drawing strength from the NYMEX ULSD contract, which rose on expectations of higher heating oil and ULSD demand in response to plummeting temperatures and the potential for refinery disruptions.

Refinery operations steady, gasoline prices fall

Atlantic Coast gasoline assessments for New York Harbor barges and for Buckeye Pipeline were assessed lower against an already bearish NYMEX February RBOB futures contract after no refinery outages were reported despite severe weather.

US Atlantic Coast RBOB gasoline for New York Harbor barges -- the main gasoline benchmark in the area -- was assessed lower on an outright basis by 2.02 cents to $2.026/gal after selling interest pressured the assessed differential lower by 0.25 cent to NYMEX February RBOB futures minus 0.95 cents/gal.

A slight contango structure for the rest of the month was observed after dead prompt barges/Buckeye barrels traded at futures minus 1 cent/gal.

Fuel distributor Mansfield Fuels said in a Jan. 6 note to its customers that "several carriers have temporarily suspended operations in key regions due to hazardous weather," after several states, including Kentucky, Missouri, Virginia, Maryland and New Jersey, declared states of emergency.

Sources also said the import market remained thin on the day.

"Gasoline demand probably is down now due to weather so [the market] should be well supplied," a second trader said. "I don't see imports picking up just yet."