Bloomberg News

Gasoline Advances as Refinery Shutdowns May Reduce Supply

January 09, 2012

Jan. 9 (Bloomberg) -- Gasoline rose for a second day in New York, reversing an earlier loss, on speculation that refinery shutdowns may reduce inventories.

Futures advanced as Motiva Enterprises LLC’s Port Arthur, Texas, refinery shut a diesel hydrotreater for repairs and will idle a crude unit Jan. 17 and a coker March 1 for work, according to two people with knowledge of the operations. ConocoPhillips and BP Plc also shut units at Texas plants.

“Gasoline is rallying on scheduled and unscheduled maintenance, which is impacting the gasoline supply,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. He said gasoline-making catalytic crackers are shut at at least two refineries in Louisiana and one in Texas.

Gasoline for February delivery increased 0.74 cent, or 0.3 percent, to settle at $2.759 a gallon on the New York Mercantile Exchange. Gasoline has risen six of the last seven days, gaining 4.1 percent.

Gasoline touched an intraday high of $2.774 after the report that Motiva was conducting maintenance. Motiva is in the process of doubling the capacity of the 300,000-barrel-a-day Port Arthur refinery near the Gulf Coast, which will make it the largest in the U.S.

ConocoPhillips is conducting planned work on unspecified units at the 260,000-barrel-a-day Sweeny refinery near the Texas Gulf Coast. BP has shut an alkylation unit at the 475,000- barrel-a-day Texas City, Texas, refinery.

Inventories Rising

The plants are shutting units as U.S. gasoline inventories reached a nine-month high and demand slid the most in 11 weeks in the seven days ended Dec. 30, according to Energy Department data. Stockpiles along the Gulf Coast were the highest since Sept. 15.

February-delivery heating oil rose 0.28 cent to settle at $3.073 a gallon on the exchange.

Heating oil fluctuated much of the day, between a high of $3.0969 and a low of $3.0531, as a drop in German industrial production indicated weakness in Europe’s largest economy and below-normal temperatures were forecast for the U.S. Northeast.

German output sank 0.6 percent in November. The median estimate of 30 economists surveyed by Bloomberg News called for a 0.5 percent drop. The National Weather Service’s Climate Prediction Center forecast lower-than-normal temperatures from Jan. 14-18 for the U.S. East Coast and Midwest.

“The oil market is still very concerned about the weakening economic situation in Europe, but there’s nothing strongly bullish or strongly bearish out there right now,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York.

Regular gasoline at the pump, averaged nationwide, climbed 0.3 cent to $3.374 a gallon yesterday, according to AAA data.

--Editors: David Marino, Charlotte Porter

To contact the reporter on this story: Barbara J Powell in Dallas at bpowell4@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net


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