Gasoline rose to the highest level since Oct. 11 after Hess Corp. (HES:US) said it will shut the Port Reading, New Jersey, refinery at the end of February.
Futures rose 2.1 percent as Hess said it plans to sell its terminal network and leave the refinery business. The network includes 28 million barrels of storage at 19 terminals on the East Coast. The 70,000-barrel-a-day refinery’s fluid catalytic cracker makes gasoline and components for blending heating oil.
“Hess consists mainly of a cat cracker that produces approximately 50,000 barrels a day of gasoline that supplies the Northeast,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Its shutdown will particularly impact summer supplies.”
Gasoline for February delivery rose 5.94 cents to $2.9348 a gallon on the New York Mercantile Exchange. Prices have risen for eight days, advancing 8.4 percent and becoming the top performer on the Standard & Poor’s GSCI commodity index. Volume was 64 percent of the 100-day average at 3:02 p.m.
The February contract expires Jan. 31. The more actively traded March contract advanced 5.11 cents to $2.9409.
March-delivery crude oil rose 56 cents to settle at $96.44 a gallon on the Nymex.
Hess said the Port Reading refinery has lost money in two of the past three years. The plant was “challenged” financially by a requirement to spend money to comply with environmental regulations for low-sulfur heating oil and “the weak forecast for gasoline refining margins,” the company said.
The announcement comes as refineries in Padd 1, which includes New York Harbor, the delivery point for Nymex futures, have units down for repairs and maintenance planned.
Philadelphia Energy Solutions will shut the Girard Point section of its plant, the largest near the harbor, this month for sixty days of work. A fluid catalytic cracker at Delta Airlines Inc. (DAL:US)’s Trainer, Pennsylvania, refinery has been shut for repairs since December.
“Refineries are going through some fairly significant turnaround, and you would have expected the Port Reading refinery to make up some of this capacity,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.
Gareth Lewis-Davies, an analyst at BNP Paribas in London, said today in an e-mailed response to questions that the closing “will be positive” for East Coast gasoline prices and will “increase scope for Europe to arbitrage gasoline and components to the U.S.”
Heating oil for February delivery increased 0.48 cent to settle at $3.0616 on the exchange. Volume was 6.6 percent above the 100-day average at 3:08 p.m..
The retail price for regular gasoline, averaged nationwide, rose 0.2 cent to $3.349 a gallon, AAA said today on its website. Prices are the highest since Dec. 7.
To contact the reporter on this story: Barbara Powell in Dallas at firstname.lastname@example.org
To contact the editor responsible for this story: Dan Stets at email@example.com