Gasoline Surges to Almost Five-Month High on Refinery Shutdowns
January 30, 2012, 3:40 AM ESTBy Barbara Powell
Jan. 27 (Bloomberg) -- Gasoline surged to the highest level since August as refinery outages, scheduled maintenance and plant closures in North America and Europe tighten supplies of the motor fuel.
Futures rose 2.8 percent as ConocoPhillips planned to shut the fluid catalytic cracker at its Bayway refinery in New Jersey. Two unprofitable Pennsylvania refineries have been closed. Hovensa LLC plans to shut its 350,000-barrel-a-day St. Croix plant in the U.S. Virgin Islands next month.
“Bayway is a big maker of gasoline in New York Harbor and you already have these other refineries shutting down,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Gasoline for February delivery rose 8.02 cents to $2.9268 a gallon on the New York Mercantile Exchange, the highest settlement since Aug. 31. It gained 5.1 percent for the week. The crack spread, or the premium of gasoline over crude oil, widened $3.19, or 16 percent, to $23.22 a barrel, the highest level since October.
Futures are sensitive to reductions in East Coast supply because New York Harbor is the delivery point for futures contracts in reformulated gasoline blendstock, or RBOB, and heating oil.
The region was facing potential shortages already after the shutdown of Pennsylvania refineries by Sunoco Inc. and ConocoPhillips. Hovensa’s St. Croix plant also supplies products to the U.S. East Coast.
European Closures
In Europe, Petroplus Holdings AG has closed three refineries as it filed for insolvency and reduced production at two other plants in the region.
In Texas, Royal Dutch Shell Plc said it had a “temporary upset” at the 340,000-barrel-a-day plant in Deer Park today. In Illinois, ConocoPhillips’s 380,900-barrel-a-day Wood River refinery reported a wet gas compressor tripped offline yesterday.
Refiners are also shutting units for planned seasonal maintenance. Valero Energy Corp.’s refinery in Meraux, Louisiana, has shut a fluid catalytic cracker, alkylation unit and a hydrocracker for scheduled work.
“Products are higher because we’ve entered into turnaround and you will see a general move to buy products and sell crude,” said Peter Beutel, president of trading advisory company Cameronhanover.com in New Canaan, Connecticut.
Preliminary volume in electronic trading for gasoline was 228,429 contracts as of 3:05 p.m. in New York, 84 percent above the three-month average. The record was 269,530 contracts set on May 11, 2011, Chris Grams, a spokesman for Nymex parent CME Group Inc., said in an interview.
February-delivery heating oil rose 1.69 cents, or 0.6 percent, to settle at $3.0704, the highest level since Jan. 9.
Regular gasoline at the pump, averaged nationwide, rose 1 cent to $3.389 yesterday, according to AAA data.
--With assistance from Nicholas Comfort in Frankfurt, and Paul Burkhardt and Ksenia Galouchko in New York. Editors: Dan Stets, Richard Stubbe
To contact the reporter on this story: Barbara Powell in Dallas at bpowell4@bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net
