U.S. gasoline futures rallied while benchmark crude oil prices dipped on Monday as Hurricane Sandy slowed East Coast fuel deliveries to a crawl, with major refineries shut, pipelines idle and ports closed.
Nearly 70 percent of the region’s refining capacity was on track to be idled, including the Phillips 66 238,000-barrel per day Bayway refinery in New Jersey, as operators braced for possible damage from abrupt power outages or flooding.
The Colonial Pipeline that supplies as much as 15 percent of the region’s fuel was also preparing for a possible closure, raising the threat of a near-term squeeze on supplies.
“Demand is going to be negated with the refineries not running and people are hunkering down all over the region, not driving,” said Mark Waggoner, president at Excel Futures Inc.
November gasoline futures, which expire on Wednesday, rose 5.77 cents to settle at $2.7568 a gallon. Monday’s $2.8115 session high was the highest price since Oct. 17.
Longer-dated gasoline prices dipped, however, as traders factored in the reduced demand for fuel with the almost total shut-down of eastern seaboard roads and airports.