Gasoline jumped to the highest level this month on concern that East Coast supplies may shrink as two refineries remain shut after Hurricane Sandy’s Oct. 29 landfall in New Jersey.
Prices rose as plants in New Jersey operated by Phillips 66 and Hess Corp. are closed. In the New York City metropolitan area, where fuel rationing was introduced to ease long lines, 72 percent of gas stations were able to sell gasoline as of Nov. 9, the Energy Department said yesterday.
“The East Coast is still awaiting the restart of the Phillips 66 Bayway and Hess Port Reading refineries,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Now that demand has returned with the reopening of gas stations and the absence of long lines, the market will need to replenish that shortfall.”
Gasoline for December delivery rose 0.33 cent to $2.7025 a gallon at 12:16 p.m. on the New York Mercantile Exchange and touched $2.7468, the highest intraday level since Oct. 31. Prices climbed 4.9 percent last week.
Hess Corp. has been told by the local electric authority that repairs were needed before sufficient power was available to support starting the 70,000-barrel-a-day refinery in Port Reading, New Jersey. Phillips 66 said on Nov. 5 that its 238,000-barrel-a-day Bayway refinery in Linden should return to normal operations in two to three weeks.
Spot gasoline in New York Harbor rose to the highest premium over futures in five weeks. Reformulated gasoline to be blended with ethanol, the same grade as the Nymex contract, gained 7 cents to 30 cents a gallon over futures, according to data compiled by Bloomberg at 11:52 a.m. in New York.
“There doesn’t seem to be a real strong answer as to when those two are coming back online and there is a little bit of nervousness about supply,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
Seven fuel terminals owned by Hess, Phillips, Citgo Petroleum Corp. and Motiva Enterprises LLC also remain closed, according to the department’s report.
Buckeye Partners LP said on Nov. 9 that its fuel distribution system serving the eastern U.S. was running at low volumes and incoming supplies were “severely constrained.”
U.S. gasoline demand in the week ended Nov. 2 fell the most in Energy Department data since Jan. 7, 2005, after Sandy shut filling stations and kept drivers off the road. Inventories of gasoline in the East Coast, or Padd 1, slipped 1.25 million barrels to 46.6 million, 8.7 percent below a year earlier.
“You’re not really seeing strong national levels of demand,” McGillian said. “But we’re just over a week away from the Thanksgiving holiday with all the driving that goes into that.”
The U.S. Thanksgiving holiday is Nov. 22. AAA, the largest U.S. motoring organization, will release its projections tomorrow for travel during the four-day holiday period, which begins Nov. 22.
The average nationwide cost for regular gasoline fell 0.2 cent to $3.437 a gallon, AAA said today on its website. That’s the lowest level since July 18. The pump price reached a 2012 high of $3.936 on April 4.
Central Atlantic prices, which jumped after Sandy, are beginning to moderate, Michael Green, a spokesman for AAA in Washington, said today. The average in New Jersey has fallen for three straight days, Long Island prices are down for the first time since Oct. 29 and the average in New York is unchanged, the first time prices haven’t risen since Oct. 30, he said.
The only place in the area where prices aren’t moderating is New York City where the average rose 0.1 cent to $4.168 a gallon yesterday and has increased every day since Oct. 31, Green said.
December-delivery heating oil sank 1.31 cents, or 0.4 percent, to $2.9924 a gallon, after climbing 2 percent last week.
--With assistance from Edward Welsch in Calgary. Editors: David Marino, Richard Stubbe
To contact the reporter on this story: Barbara J. Powell in Dallas at bpowell4bloomberg.net
To contact the editor responsible for this story: Dan Stets at dstetsbloomberg.net