Gasoline Rides Longest Rally Since July 2009 on Plant Shutdowns

Gasoline rose a ninth straight day, the longest rally since July 2009, on speculation U.S. East Coast refinery shutdowns will tighten supplies.

Futures jumped to a four-month high after Hess Corp. said yesterday that it will close by the end of February its Port Reading, New Jersey, fluid catalytic cracker, which primarily makes gasoline for the East Coast market. Already, plants in PADD 1, which includes New York Harbor, the delivery point for Nymex futures, have units down for repairs.

“The market’s telling us we usually have seasonal maintenance starting up now,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Some work seems earlier than usual with a large amount of units offline. In addition, they’re going to shut down Port Reading.”

Gasoline for February delivery climbed 3.86 cents, or 1.3 percent, to $2.9734 a gallon on the New York Mercantile Exchange, the highest settlement since Sept. 28. Prices have advanced 9.9 percent since Jan. 15, the top performer on the Standard & Poor’s GSCI commodity index during that period.

Volume was 16 percent above the 100-day average for the time of day. The more actively traded March gasoline increased 3.54 cents to $2.9763 a gallon. February gasoline and heating oil contracts will expire at the end of floor trading Jan. 31.

Between now and May, an average 1.5 million barrels a day of U.S. refinery capacity will be shut, according to Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a research consulting company in London.

The March gasoline crack spread increased 35 cents to $27.43 a barrel. The February contract’s discount to March narrowed to 0.29 cent, the smallest since Jan. 3.

Refinery Work

Philadelphia Energy Solutions will shut the Girard Point section of its plant, the largest near the harbor, this month for sixty days of work. A fluid catalytic cracker at Delta Airlines Inc.’s Trainer, Pennsylvania, refinery has been shut for repairs since December.

“The Trainer cat cracker is still offline and by this weekend, Philadelphia Energy Solutions be going into maintenance and by the end of February the Port Reading refinery will be shut,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Heating oil advanced on speculation that distillate fuel inventories fell last week and as November home prices rose by the most in six years, indicating a stronger economy.

The Energy Information Administration will probably report tomorrow that stockpiles of heating oil and diesel fell 500,000 barrels last week, according to the median estimate of nine analysts in a Bloomberg survey.

The S&P/Case-Shiller property values index climbed 5.5 percent from November 2011, the biggest year-over-year jump since August 2006.

Economic Data

“There’s a continuation of a trend of decent economic numbers around the world, which is having a positive effect,” said Jim Colburn, a vice president and energy options broker at Jefferies Bache LLC in New York.

Heating oil for February delivery rose 4.76 cents, or 1.6 percent, to settle at $3.1092 a gallon on the exchange, a three-month high. Volume was 2.1 percent below the 100-day average for the time of day.

The more actively traded March contract advanced 4.43 cents to $3.0986 a gallon.

The March heating oil crack spread increased 73 cents to $32.57 a barrel on the exchange. The discount of February heating oil to gasoil on the ICE Futures Europe exchange widened 0.58 cent to 3.57 cents a gallon as of 3 p.m., based on the Bloomberg fair-value data.

The EIA is scheduled to report last week’s inventories at 10:30 a.m. tomorrow in Washington. The report will probably show that supplies of the gasoline rose 1 million barrels, according to the survey.

The retail price for regular gasoline, averaged nationwide, rose 1.5 cents to $3.364 a gallon, the highest level since Dec. 6, AAA said today on its website.