Eurobob gasoline crack swap surges to 4-month high on refinery closure
London (Platts)--29Jan2013/713 am EST/1213 GMT
The Eurobob front-month gasoline crack swap surged to a four-month high
at Monday's European close after Hess announced plans to close down its sole
70,000 b/d refinery at Port Reading, in New Jersey, a gasoline trader said
At Monday's European close, the February FOB Rotterdam EBOB gasoline
crack swap was assessed at $13.15/barrel, up from Friday's $10.75/b, the
highest recorded level since September 28, when it was assessed at $17.25/mt.
Tuesday morning, the front-month crack swap was pegged at $11.98/b, a
second trade source said.
"It's all just a reaction to that news," a trader said of the rise. "The
shortfall for the east coast will have to come from Europe so this summer
might be interesting."
Article continues below...
|Platts 6th Annual Crude Oil Summit|
New Supply, New Demand and the New World Order: May 13-14, London, UK
Platts Crude Oil Summit 2013 has assembled influential leaders and foremost experts from the international oil community to evaluate and debate the industry's evolving landscape and explores how the 'new supply' and 'new demand' era is changing the game for all involved.
The Port Reading refinery, which supplies refined products to the New
York Harbor market -- delivery point for the NYMEX RBOB futures contract --
is scheduled to close by the end of February, the company said in a statement
Port Reading has a fluid catalytic cracking unit which produces around
35,000/mt gasoline on a daily basis, the trader said.
"It's not that large an amount but [the news] has just spooked the
market given so much capacity has been lost on the US East Coast," he said.
During the last months of 2011 and the first part of 2012, more than 1
million b/d of US East Coast's regional refining capacity was either shut
down or in the process of being closed, industry sources said.
This included shutdowns of Sunoco's 178,000 b/d Marcus Hook refinery in
Pennsylvania and the 350,000 b/d Hovensa refinery in the US Virgin Islands,
as well as possible closures of Sunoco's 330,000 b/d Philadelphia refinery
and ConocoPhillips' 185,000 b/d Trainer facility, also in Pennsylvania.
This spate of refinery closures -- excacerbated by limited pipeline
space and the Jones Act, the trader said -- means the US East Coast will
continue to rely on European gasoline imports. The Jones Act requires goods
moved between US ports to be carried by US-built ships and staffed by US
"The problem is the Jones Act. The Gulf Coast is producing plenty of
gasoline but you only have the colonial pipeline. It can only be shipped on
US vessels that are US made, owned and staffed so the cheapest way is from
Europe," he added.
The Colonial Pipeline carries 38 different grades of gasoline, seven
grades of kerosene, and 16 grades of home heating oil and diesel fuel from
Texas to Linden, NJ.
--Anna Ward, email@example.com
--Orkhan Hajiyev, firstname.lastname@example.org
--Edited by James Leech, email@example.com