Gasoline rose on speculation that refinery closures and unit shutdowns will reduce inventories of the motor fuel on the East Coast.
Futures rose a day after Hess Corp. (HES) said it’s conducting a technical assessment of the fluid catalytic cracker at its gasoline-making Port Reading refinery in New Jersey. Two Pennsylvania refineries have shut, as well as a refinery in the Virgin Islands that serves the Eastern U.S.
“With St. Croix out and possibly the Hess refinery, we could see 800,000 barrels a day of capacity not here in the spring and that’s what I think is underpinning the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.
Gasoline for February delivery rose 0.77 cent, or 0.3 percent, to $2.8127 a gallon at 9:44 a.m. on the New York Mercantile Exchange.
Hess said yesterday that the catalytic cracker, which makes gasoline for the New York area, is malfunctioning. Hess will continue to operate Port Reading “as long as it generates acceptable financial returns,” Jay Wilson, vice president of investor relations in New York, said in an interview yesterday.
Closing that refinery could mean losing as much as 50,000 barrels a day of gasoline, said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
“Gasoline is being supported by refinery closures and the Hess cat cracker issue,” Lipow said.
New York Harbor is the delivery point for reformulated gasoline blendstock, or RBOB, and heating oil futures on the New York Mercantile Exchange. That region is already facing potential supply tightness after the shutdown of two Pennsylvania refineries by Sunoco Inc. (SUN) and ConocoPhillips. (COP)
Hovensa LLC, a partnership of Hess Corp. and Petroleos de Venezuela SA, said on Jan. 18 it will shut the 350,000-barrel-a- day St. Croix refinery in the U.S. Virgin Islands by mid- February because the plant is losing money. That refinery supplies products to the U.S. East Coast.
February-delivery heating oil fell 1.46 cents, or 0.5 percent, to $3.0096 a gallon on the exchange.
Regular gasoline at the pump, averaged nationwide, fell 0.2 cent to $3.379 yesterday, according to AAA data. Prices were 8.6 percent higher than a year earlier.
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