Bloomberg News

Gasoline Gains on Chance U.K. Refinery Will Shut Down

May 29, 2012

Gasoline rose on the possibility that Petroplus Holdings AG will shut its 175,000-barrel-a-day Coryton oil refinery in the U.K., reducing European exports to the U.S.

Futures gained after Steven Pearson, a partner at PricewaterhouseCoopers LLP, Petroplus’s U.K. administrator, said by phone today from the site in southeast England that crude supply at the plant will run out sometime next week. Coryton would be the sixth European refinery to stop production since the start of 2011.

“You’re seeing the effect of the Coryton refinery shutting down,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “That would require the U.K. to import additional supplies of gasoline and there would be less for exporting.”

Gasoline for June delivery increased 1.36 cents, or 0.5 percent, to settle at $2.9065 a gallon on the New York Mercantile Exchange, the third consecutive gain. The price has dropped 8.7 percent in May.

Prices touched $2.94 before equities pared gains and the dollar touched the strongest level against the euro since 2010, reducing the investment appeal of commodities. The Standard & Poor’s 500 gained 0.8 percent at 3:03 p.m. in New York, after rising as much as 1.3 percent earlier.

“It looks like the dollar has turned around a bit and equities have given back some gains,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut.

U.S. gasoline imports fell 15 percent to an average 575,000 barrels a day in the week ended May 18, according to Energy Department data.

Petroplus Insolvency

Coryton was one of five refineries in Europe operated by Petroplus until the Swiss refiner filed for insolvency in January. Its plants in Germany, France, Belgium and Switzerland were halted and two have subsequently been sold.

U.S. gasoline supplies were at the lowest level since November 2008 in the week ended May 18, according to department data. Stockpiles have fallen 13 percent in 14 straight weeks of declines.

“People believe demand will increase for gasoline and supplies for gasoline will remain tight,” said Phil Flynn, vice president of research at PFGBest in Chicago.

June-delivery heating oil fell 2 cents, or 0.7 percent, to $2.8088 a gallon, after touching $2.853. Prices have fallen 12 percent in May.

Regular gasoline at the pump, averaged nationwide, fell 0.5 cent to $3.636 a gallon yesterday, according to AAA. It was the lowest level since Feb. 22. Gasoline is down 7.6 percent since reaching a 2012 high of $3.936 on April 4.

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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