Gasoline Futures Jump as Frigid Air Causes Refinery Shutdowns
Jan. 7 (Bloomberg) --Gasoline futures rose for the first time in seven days as frigid temperatures caused refinery shutdowns from Newfoundland to Louisiana.
Valero Energy Corp. (VLO)’s Memphis refinery in Tennessee had a instruments freeze and units trip offline, a person familiar with operations said. Phillips 66 (PSX) had an electrical issue at its Westlake plant in Louisiana, according to a regulatory filing. Korea National Oil Corp.’s site in Come-by-Chance, Newfoundland, is trying to restart after an island-wide power failure over the weekend, company spokeswoman Gloria Slade told CBC News.
“The concern over some of the refinery issues we’ve seen as a result of the brutally cold climate across the continent has led to buying in the refined products,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.
Gasoline for February delivery rose 2.05 cents, or 0.8 percent, to $2.6665 a gallon at 10:32 a.m. on the New York Mercantile Exchange. Trading volume was 29 percent above the 100-day average.
The frigid air extends across the upper Midwest into the South and eastward to the Atlantic, said Tom Kines, a meteorologist with AccuWeather Inc. in State College, Pennsylvania. Today, New York’s high will struggle to reach 10 degrees, a day after Central Park hit 50. As of 8 a.m., it was 4 degrees in New York, breaking a record for the date set in 1896, AccuWeather said.
ExxonMobil Corp. (XOM)’s Joliet, Illinois, refinery had unidentified problems with process units because of extreme cold, according to a filing with the National Response Center.
“Those issues are impacting the products,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “There will be delays in receiving supplies. But much of it is offset by the decline in demand due to the poor weather.”
“The crack spreads are particularly strong when you have concern about supply,” said Lebow.
The average U.S. pump price fell 0.3 cent to $3.314 a gallon, according to Heathrow, Florida-based AAA. Prices are 1.7 cents above a year earlier.
Ultra low sulfur diesel for February delivery advanced 1.27 cents, or 0.4 percent, to $2.9515 a gallon. Volume was 14 percent above the 100-day average.
Diesel’s crack spread versus West Texas Intermediate crude, a rough measure of refining profitability, widened 26 cents to $30.26 a barrel. The premium over European benchmark Brent gained 20 cents to $16.90.
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