UpdateUS benzene bids, offers widen on Hurricane Sandy

29 October 2012 16:36  [Source: ICIS news]

Hurricane Sandy approaches(adds paragraphs 1-11)

HOUSTON (ICIS)--Bids and offers for US benzene widened on Monday because of concerns about Hurricane Sandy, which already have caused gasoline prices to increase.

US November benzene spot prices early in the day were discussed at $4.85-5.35/gal ($1,452-1,601/tonne, €1,118-1,233/tonne) FOB (free on board), a wider range from $4.95-5.15/gal FOB the previous session, as offers were stronger and bids were lower.

Some traders said they expected benzene to rise following higher prices in Europe and Asia.

Despite the active bid/offers for benzene, other aromatics markets in toluene and xylene were quiet.

Already, US gasoline futures spiked nearly 10 cents/gal in morning electronic trading as Hurricane Sandy tightened an already thin supply situation.

Futures were at $2.7936/gal, up 9.45 cents from the previous close, during the mid morning.

Gasoline stocks in the east coast were at 48.1m bbl for the week ending 19 October, down 9.1% from the same period a year ago, according to the US Energy Information Administration (EIA).

Energy analyst Phil Flynn said, "The shutdown of major cities and the expected power outages may take a toll on demand unlike anything we have seen before. The impact on demand may not last for hours but more than likely for days. This could be the biggest demand destruction event in history."

The east coast is the biggest consumer of gasoline at around 3.1m bbl/day, according to the EIA. The midwest is the second largest consumer at 2.5m bbl/day.

The east coast produces only about 40% of the gasoline it consumes, while the rest is supplied through pipelines from the US Gulf coast and imported from Europe.

Several northeast US energy producers shut down or reduced operating rates as Hurricane Sandy drew closer to the coast.

Phillips 66 shut down its 238,000 bbl/day Bayway Refinery in Linden, New Jersey, the company said. It also closed three storage terminals in New Jersey and New York.

NuStar Energy shut down its 74,000 bbl/day in Paulsboro refinery in New Jersey, according to various news reported.

Hess Corporation planned to cut rates at its 70,000 bbl/day plant in Port Reading, New Jersey, according to the US Department of Energy (DOE), which quoted other news reports.

Philadelphia Energy Solutions reduced rates at its 335,000 bbl/day refinery in Philadelphia, Pennsylvania, the DOE reported.

The company later plans to shut down the Philadelphia refinery, according to Reuters.

PBF Energy has reduced rates at its 182,200 bbl/day refinery in Delaware City, Delaware.

Hurricane Sandy was about 205 miles (330km) southeast of Atlantic City, New Jersey, according to the National Hurricane Center as of 1100 hours New Jersey time (1500 hours GMT). It was travelling north northwest at about 15 miles/hour (24 km/hour).

Sandy should make landfall near the southern New Jersey coast late in the day, the centre said.

Sandy had maximum wind speeds near 90 miles/hour, with hurricane-force winds extending by up to 175 miles, the centre said.

According to the US Energy Information Administration, 6.5% of US refining capacity lies in Sandy's path.

($1 = €0.77)

For more information, see ICIS plants & projects

Additional reporting by Bobbie Clark, Tracy Dang and Al Greenwood

By: Brian Balboa
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