CME Relaxes Gasoline Delivery Rules for New Jersey Amid ShortageBy
Delivery of more gasoline grades for October contract allowed
EPA on Sept. 16 eased rules to ensure adequate supplies
The New York Mercantile Exchange eased rules for October deliveries after a spill on the nation’s largest pipeline reduced supply.
Nymex will allow deliveries of conventional gasoline and related blendstocks, in addition to reformulated blendstocks, or RBOB, to fulfill October contracts, according to a CME Group Inc. notice Thursday. That brings the CME in line with the U.S. Environmental Protection Agency, which relaxed standards on Sept. 16. The various grades can also be commingled, the notice showed.
The Environmental Protection Agency eased the rules Sept. 16 to ensure adequate supplies until Oct. 6 after a Sept. 9 spill on Colonial Pipeline Co.’s main gasoline line reduced deliveries to the eastern U.S.
“Whenever there’s any of these unforeseen events that would threaten the possibility of supply run-outs to retail, the EPA becomes a little bit generous," said Ernie Barsamian, a principal at the Tank Tiger, a tank-storage broker from Princeton, New Jersey.
October gasoline futures’s premium over November spiked to a record last week as traders worried that supplies would be too tight to execute contract deliveries. The spread slumped to 1.61 cents a gallon today after CME said October contract specifications would relax.
"It’s really up to the marketplace if they need it to use that waiver. We will not restrict the market," said Dan Brusstar, CME Group director of energy research by phone. "Whatever EPA deems as legal gasoline, we have to also allow that to be delivered."