Gasoline gained as Tropical Storm Karen may threaten Gulf Coast refineries, disrupting production and distribution of the motor fuel.
Futures rose as the National Hurricane Center issued a hurricane watch from Grand Isle, Louisiana, to Indian Pass, Florida. Karen, which formed in the southeast Gulf of Mexico, is expected to be at or near hurricane strength tomorrow. The forecast track predicts landfall as a tropical storm near the Alabama-Florida line late Oct. 5.
“We’ve been down pretty strongly, especially in gasoline,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. It shows how much the market has dropped “if just the threat of flooding for the refineries near Louisiana can push the market higher,” he said.
Gasoline for November delivery rose 2.99 cents, or 1.1 percent, to $2.6586 a gallon at 10 a.m. on the New York Mercantile Exchange. Trading volume was 24 percent above the 100-day average.
The motor fuel’s crack spread versus West Texas Intermediate crude widened $1.40 to $7.71 a barrel. The fuel’s premium over Brent increased 78 cents to $2, after falling yesterday to the lowest level since Oct. 30.
The storm is arriving as plants shut units for seasonal maintenance, which has already begun to reduce production. Refinery utilization fell 1.3 percentage points to 89 percent in the week ended Sept. 27, the lowest level since June 7, the Energy Information Administration reported yesterday.
Pump prices, averaged nationwide, fell 0.9 cent to $3.376 a gallon, the lowest level since Jan. 28 and 40.6 cents below a year ago, Heathrow, Florida-based AAA said today on its website. We’ve been down pretty strongly especially in gasoline prices. If get flooding in the refineries, won’t be using crude
In Louisiana, a tropical storm watch is in effect from Grand Isle to Morgan City, including New Orleans. The system, which has top sustained winds of 60 miles (95 kilometers) per hour, is 500 miles south of the mouth of the Mississippi River and moving north-northwest at 13 mph.
Ultra-low-sulfur diesel for November delivery rose 1.97 cents, or 0.7 percent, to $3.0124 a gallon on trading volume that was 58 percent above the 100-day average.
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