Reuters reported that US gasoline futures rallied even as Brent and US crude retreated as over two thirds of the East Coast refining sector shut down ahead of Hurricane Sandy.
US heating oil futures also gained, touching the highest level relative to US crude oil on record as dealers hedged against the risk of power outages and flooding that could damage refineries and keep production shut for weeks. The crack spread, the difference in value between a barrel heating oil and a barrel of crude oil, touched USD 45.15 per barrel on Thursday.
Deutsche Bank analysts said that markets will be watching for reports of damage to energy infrastructure, notably refineries, post Sandy given the state of extremely low gasoil inventories as we move into winter season.
Front month RBOB gasoline futures reached USD 2.8115 a gallon the highest price since October 17th 2012 before paring gains as traders factored in the reduced demand for fuel with the almost total shut down of eastern seaboard roads and airports.
By 1700 GMT, November gasoline futures were up 4.26 cents or 1.5% at USD 2.7417 a gallon. Nearly 70% of the region’s refining capacity was on track to be idled including the Phillips 66 238,000 barrel per day Bayway refinery in New Jersey.
US November heating oil was up 1.97 cents at USD 3.1175 a gallon. US crude futures retreated as ample domestic crude supply and the sharp reduction in crude oil needed by refineries shut by the hurricane weighed on prices.
Brent December crude fell 45 cents to USD 109.10 a barrel having reached USD 110.26. Brent on Monday was on pace to post a more than 2% loss for the month, a second straight monthly loss.
US December crude fell USD 1.20 to USD 85.08 per barrel. Monday’s $84.66 intraday low was the lowest price since July. US crude futures were on track to end October down more than 7% after sliding more than 4% in September.
Mr Mark Waggoner president at Excel Futures Inc said that “Demand is going to be negated with the refineries not running and people are hunkering down all over the region not driving. Fifty million people from the US Mid Atlantic to Canada were in the path of Hurricane Sandy. Forecasting services expected the storm to strike the New Jersey shore near Atlantic City on Monday night.”
Source - Reuters
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