Bloomberg News

Gasoline Reverses Drop on Hess Port Reading Power Loss

November 28, 2012

Gasoline rose, reversing a decline near the close of floor trading after Hess Corp. said its Port Reading, New Jersey, refinery lost power yesterday.

Futures rebounded as Hess said the 70,000-barrel-a-day refinery was shut, just a week after returning to full production for the first time since Hurricane Sandy. Prices slipped 1.8 percent earlier after the Energy Department reported that gasoline stockpiles rose the most in four months last week.

“Knocking out Port Reading is a reminder that coming back from Hurricane Sandy is going to take some time,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.

Gasoline for December delivery rose 0.18 cent to settle at $2.7339 a gallon on the New York Mercantile Exchange. The more actively traded January contract slipped 0.79 cent, or 0.3 percent, to $2.6877. December gasoline and heating oil futures will expire Nov. 30.

Inventories of the motor fuel rose 3.87 million barrels to 204.3 million barrels last week, the highest level since the week ended Aug. 3. Gasoline demand declined 5.3 percent to 8.43 million barrels a day, 3.9 percent below a year earlier.

“We have refineries returning from maintenance and we continue to see year-on-year declines in gasoline demand,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Demand has slipped for two weeks after jumping 7.2 percent in the seven days ended Nov. 9 as wholesalers restocked after Hurricane Sandy disrupted production and distribution in the Central Atlantic.

Lower Demand

“Gasoline stocks were also buoyed by a return to a more normal and depressed level of implied demand,” Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA in London and Gareth Lewis-Davies, an oil market strategist at the bank, said in a research note. “Support for gasoline is likely to weaken as stocks build seasonally from current normal levels.”

The largest increase in gasoline stockpiles was in the U.S. East Coast, or PADD 1 region. Inventories rose 1.25 million barrels to 47.4 million. All refineries the area had resumed normal production after Hurricane Sandy until Hess’s Port Reading plant shut.

“You will continue to build seasonally, and in Padd 1 as these refineries are coming back,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research consultant in London.

Distillate supplies, including heating oil and diesel, fell 800,000 barrels to 112 million last week, the lowest level since May 2008. Demand tumbled 8.7 percent to 3.84 million barrels a day, after rising the prior week to the highest level in 11 months.

East Coast

Stockpiles in the East Coast, or PADD 1 region, rose 1.92 million barrels to 36.4 million, after dropping the week before to the lowest level since May 2008. Inventories are 36 percent below year-earlier levels.

December-delivery heating oil fell 0.14 cent to settle at $3.008 a gallon, after touching $2.9745. The more actively traded January contract slipped 0.38 cent to $3.0209.

The average nationwide cost for regular gasoline fell 0.4 cent to $3.415 a gallon, AAA said today on its website. The pump price reached 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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