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 0.9 percent 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 2.64 cents, or 0.9 percent, to $3.0585 a gallon on the New York Mercantile Exchange, the highest settlement since Dec. 27.

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 $6.75 to $945.25 a metric ton after touching $950, while February Brent increased 54 cents to $111.94 a barrel.

Crack Spread

The February heating oil crack spread, or premium of heating oil over West Texas Intermediate crude on Nymex, jumped $1.15 to $35.31 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.

The Energy Department is scheduled to report last week’s inventories at 10:30 a.m. tomorrow in Washington. Supplies of distillates including heating oil and diesel, probably rose 1.9 million barrels and gasoline stockpiles increased 2.5 million, according to the median estimate of 11 analysts in a survey by Bloomberg.

Inventory Report

In the week ended Dec. 28, distillate inventories rose 4.57 million barrels to 124 million, the highest level in three months. Gasoline supplies rose 2.57 million barrels to 225.7 million, the highest level since Mach 16.

Gasoline for February delivery gained 1.7 cents, or 0.6 percent, to settle at $2.7944 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.

Gasoline pump prices in the U.S. will peak at $3.60 to $3.80 a gallon this year, AAA Chief Executive Officer Robert Darbelnet projected today. Prices in 2012 reached $3.936 on April 4. The 2012 average price was a record $3.60 a gallon, according to data from the largest U.S. motoring organization.

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