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New York Gasoline Gains Over Speculation Supply Lines Strained

New York gasoline strengthened on speculation that lower refinery capacity on the U.S. East Coast and limited shipments of the fuel from the Gulf Coast in the Colonial pipeline is tightening supplies in the region.

Colonial Pipeline Co. will allocate shipments on line 1, its main gasoline line, for cycle 40, according to a July 5 notice to shippers. Refineries including Hovensa LLC’s St. Croix refinery in the U.S. Virgin Islands and the Trainer plant in Pennsylvania, now owned by a subsidiary of Delta Air Lines Inc., both shut before the start of the peak summer U.S. demand season.

“Colonial pipeline is full and incremental supplies cannot make it to New York to make up from the loss from Trainer and Hovensa,” Andy Lipow, president of Lipow Oil Associates LLC in Houston, said in an electronic message.

The discount for conventional, 87-octane gasoline in New York Harbor narrowed 2.25 cents to 1.25 cents a gallon versus futures traded on the New York Mercantile Exchange at 3:54 p.m., according to data compiled by Bloomberg. It’s the highest level since June 14. Prompt delivery rose 6.59 cents to $2.7469 a gallon.

The discount for the same fuel in the Gulf Coast shrank 1 cent to 13.88 cents a gallon under futures.

Valero Energy Corp. started a fluid catalytic cracker over the weekend and is putting into service an alkylation unit at its Houston refinery after completing unplanned work.

The 65,000-barrel-a-day catalytic cracker and the 11,000-barrel-a-day alkylation unit were shut after an upset July 5, Bill Day, a San Antonio-based spokesman, said in an e-mail last week.

The same fuel in Chicago widened its discount 1.5 cents to 8.5 cents a gallon versus futures.

Citgo Petroleum Corp.’s Lemont, Illinois, refinery restarted a compressor yesterday after it was shut down earlier in the day. The incident didn’t affect production, Citgo said in an e-mailed statement.

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