30 October 2012 16:13 [Source: ICIS news]
HOUSTON (ICIS)--US gasoline futures retreated on Tuesday, giving back nearly all the gains made during the previous electronic session.
Prices were $2.7105/gal during the mid-morning, down by 4.63 cents/gal, as demand in the US northeast fell dramatically. Hurricane Sandy lashed the east coast overnight, keeping people off the roads.
The storm caused about two-thirds of refining capacity in the region to shut down, tightening an already thin supply situation. The Colonial pipeline, which supplies the region with gasoline from the US Gulf, is also closed.
However, analysts say that demand will likely remain extremely low in the US northeast, the top consumer of gasoline in the country.
“Even here, as far away as Chicago, the closing of the stock markets and the threats of high winds [are] making traffic extremely light,” said Phil Flynn, an analyst with Price Futures Group. “Many people are staying home, if possible."
“I think that this is a sign that this storm may have a greater impact on demand destruction than many have calculated,” Flynn added.
He said power outages and the shutdown of travel in major cities may cut oil demand “unlike anything we have seen before”.
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