Heating Oil Futures Advance on Unit Shutdowns, Higher Gasoil

Heating oil advanced on speculation that refinery unit shutdowns will reduce supplies and that higher gasoil prices in Europe will attract diesel shipments from the U.S.

Futures rose as the U.S. neared winter refinery maintenance season and Motiva Enterprises LLC again shut the new 325,000- barrel-a-day crude unit at its Port Arthur, Texas, refinery because of a leak. Gasoil climbed to the highest level since Dec. 3 on ICE Futures Europe exchange in London.

“There’s the anticipation we’re entering into refinery turnaround season which will impact supply, and the market continues to await Motiva starting up its new crude unit,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “Higher gasoil prices attract exports from the U.S.”

Heating oil for February delivery rose 3.13 cents, or 1 percent, to $3.0634 a gallon at 10:17 a.m. on the New York Mercantile Exchange, after touching $3.0752.

There is no timeline for the restart of the Motiva crude unit, which has been idled since a Dec. 11 fire that was caused by a leak on the unit’s heater outlet. The crude unit first shut for repair just days after its May debut as the centerpiece of an expansion to almost double capacity of the refinery to 600,000 barrels a day.

Gasoil for January delivery rose $8, or 0.9 percent, to $946.50 a metric ton and touched $950, while February Brent increased 38 cents to $111.78 a barrel.

Crack Spread

The February heating oil crack spread, or premium of heating oil over crude, jumped $1.51 to $35.67 a barrel.

“Refinery maintenance is ahead going into February and March, and products will strengthen,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research consulting company in London. “And whenever Motiva can’t start that crude unit, heating oil cracks get stronger.”

Philadelphia Energy Solutions plans to close the Girard Point section of its Philadelphia refinery near the end of January for about 60 days of work, a person familiar with the situation said on Dec. 26.

Gasoline for February delivery gained 1.49 cents, or 0.5 percent, to $2.2923 a gallon on the exchange.

The average nationwide retail price for regular gasoline rose 0.3 cent to $3.30 a gallon, AAA said today on its website.

To contact the reporter on this story: Barbara 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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