Heating oil and gasoline rose a second day on concern that Hurricane Sandy may disrupt East Coast production and imports, and as the U.S. economy expanded more than forecast in the third quarter.
Futures gained as Hurricane Sandy will probably grow into a “Frankenstorm” that may become the worst to hit the U.S. Northeast in 100 years if current forecasts are correct. Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2 percent annual rate after climbing 1.3 percent in the prior quarter, Commerce Department figures showed today in Washington.
“We’re moving up because of Hurricane Sandy and its impact on East Coast refineries,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “And the complex is moving on the back of the GDP figures. The expectation is product demand will remain steady or grow slightly in the future.”
Heating oil for November delivery gained 3.57 cents, or 1.2 percent, to settle at $3.0978 a gallon on the New York Mercantile Exchange. Prices fell 1.2 percent this week, the second consecutive weekly loss.
The hybrid storm may strike anywhere from the Delaware-Maryland-Virginia peninsula to southern New England. The current National Hurricane Center track has it going ashore just south of the Delaware Bay on Oct. 30 and moving northwest between Baltimore and Wilmington, Delaware.
“There may be concern about deliverability of products,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago.
Refiners in the region, which includes New York Harbor, the delivery point for Nymex futures, can process 1.29 million barrels a day, according to data compiled by Bloomberg. East Coast, or Padd 1, gasoline supplies were 9.1 percent below year-earlier levels last week, Energy Department data show. The East Coast imported 471,000 barrels a day of gasoline last week, according to department data.
“It’s going to impact supply logistics in terms of movement up and down the East Coast,” said Sander Cohan, a global transportation fuels analyst and principal with Energy Security Analysis Inc. in Wakefield, Massachusetts. “Ship and barge traffic in and out of New York Harbor could be impacted. You might see a drop in demand if there is real damage.”
The storm may bring winds of 50 miles (80 kilometers) per hour stretching from the mid-Atlantic to Boston and widespread power outages, said Tom Kines, a senior meteorologist at AccuWeather Inc. in State College, Pennsylvania.
The storm could disrupt the movement and production of products just as U.S. stockpiles of heating oil are 30 percent below year-earlier levels.
“It’s going to hit right at New York Harbor and just at the point when heating oil is about to move into the residential market,” Cohan said.
Gasoline for November delivery advanced 2.27 cents, or 0.9 percent, to settle at $2.6991 a gallon. Prices rose 0.1 percent this week, the first gain in three weeks.
The average nationwide price for regular gasoline at the pump declined 2.4 cents to $3.575 a gallon yesterday, AAA, the largest U.S. motoring organization, said today on its website. That’s the lowest level since Aug. 2. Prices have fallen every day since Oct. 8, declining 6.4 percent. The pump price reached a 2012 high of $3.936 on April 4.
By election day, the national average will slide to about $3.40 to $3.50, according to Heathrow, Florida-based AAA.