03 November 2010 00:00 [Source: ICIS news]
By Sheena Martin
HOUSTON (ICIS)--Fewer imports and delayed pipeline shipments have tightened the gasoline supply on the US east coast, pushing prices up more than 10 cents compared with the US Gulf, a trader said Wednesday.
“Two different things are going on,” said a trader for products on the US Gulf and New York Harbour. “[There have been fewer] gasoline imports into the New York Harbour. And with the Colonial Pipeline on allocation, the only option…is to put them on ship and pay.”
On 2 November, the cash market price for unleaded regular gasoline in the New York Harbour market was $2.16/gal, nearly 12 cents higher than the US Gulf market. New York Harbour fuel prices have typically seen a 4-cent/gal premium to the US Gulf as a result of the 4.25 cent/gal tariff on fuel shipped up the Colonial Pipeline.
Imports of motor gasoline to the east coast were 19% lower year-on-year for the week ended 29 October, according to the weekly report from the Energy Information Administration (EIA).
East coast stockpiles dropped to 51.7m bbl from 77.4m bbl in the past two months, a fall of 33%.
The US Gulf, meanwhile, has seen imports of 84,000-156,000 bbl/day for the past two weeks with gasoline stockpiles of 73.5m bbl, about 19% higher compared with two months ago.
“[We have] limited gasoline imports from Europe that have tightened supplies in the New York Harbour,” said another trader.
Usually, excess gasoline production in Europe is shipped to the New York Harbour, while the US ships excess diesel to Europe due to respective automobile fuel demand. But in Europe, refinery runs through October 2010 were 1.4m bbl/day below January-October 2008 levels.
In September, refiners in northwest Europe were carrying out planned shutdowns, which dropped profits to their lowest levels in eight years.
Just as the refineries were returning to service, labour disputes at an oil terminal in southern France and at 13 refineries throughout the country caused further production outages.
Phil Flynn, senior market analyst with PFGBest, said in October that when the French strikes end, traders could see the market collapse as imports come to the US from Europe.
The Gulf coast is the main production hub in the US and supplies other markets with fuel. However, when there is an excess of product being shipped – too much for the pipelines to handle – the pipelines go on allocation, which causes shipment delays.
The primary alternative for traders and end-users is to move fuel by barge, which can cost as much as 9 cents/gal.
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