ditto: here's something from Bloomberg in way of confirmation
Energy News
Sat, 27 Mar 1999, 12:53am EST
N.Y. Gasoline Surges to 10 1/2-Month High as Refinery Fire Cuts Supplies
Gasoline Surges as Chevron Refinery Fire Cuts Supply (Update5)
(Adds performance for the week in 4th-6th and final
paragraphs.)
New York, March 26 (Bloomberg) -- Gasoline rose to a
10 1/2-month high, pulling crude oil prices higher, after an
explosion and fire at a Chevron Corp. refinery near San Francisco
raised concern about supply.
The fire was the fourth refinery disruption in as many weeks
in California, the biggest U.S. gasoline market. Gasoline prices
already were rising after an agreement this week by exporting
nations to cut oil supplies 2.7 percent to end a world oil glut.
Chevron's refinery fire ''will put a strain on the system,''
said Tom Bentz, senior vice president-energy at Cresvale
International LLC in New York. Gasoline prices ''will definitely
be higher.''
Gasoline for April delivery rose 2.22 cents, or 4.6 percent,
to 50.63 cents a gallon on the New York Mercantile Exchange, the
highest price since May 15. Gasoline prices gained 6.3 percent
this week.
''I wouldn't be surprised to see gas stations running out in
spots,'' said Michael Busby, manager of crude oil and refined
products trading at Northville Industries Corp. in Melville, New
York. Northville is the nation's biggest gasoline importer.
At Fisherman's Wharf Union 76 in San Francisco, the price of
unleaded regular already has jumped about 20 cents to $1.559 a
gallon in the past few days. ''The way it's going, it could get
to $2 a gallon,'' said Peter Leung, a partner at the station,
which sells about 100,000 gallons of gasoline a month.
Crude oil for May delivery on the Nymex rose 50 cents, or
3.2 percent, to $16.17 a barrel on the Nymex, the highest closing
price since March 30, 1998. Prices rose 5.3 percent this week.
In London, May Brent crude rose 47 cents higher at $14.41 a
barrel on the International Petroleum Exchange, the highest price
since Sept. 30. Brent prices rose 7.1 percent this week.
Effect Worldwide
For he next month, California, the nation's biggest gasoline
consumer, will be short 300,000 barrels a day, or more than one
third of its 870,000-barrel-a-day consumption, Northville's Busby
said.
The effect of California's shortage will be felt worldwide,
as supplies originally intended for other regions will be sent
there, Busby said. About 75,000 barrels a day in gasoline from
Europe will be sent to Florida, instead of New York, allowing
supplies originally intended for Florida to be shipped via tanker
through the Panama Canal to California.
The Gulf Coast refiners will boost production and add
150,000 barrels a day to be sent to California. Another 75,000
barrels a day will go from Asia to California, Busby said.
All those movements could disrupt gasoline distribution
throughout the state, Busby said. The Chevron hydrocracker may
make premium unleaded especially scarce because a unit of that
type is needed to make premium, Busby said.
''Gasoline could be very hard to get,'' said Leung, the part-
owner of the Fisherman's Wharf service said.. ''Right now, we're
expecting to run out.''
Parts of refineries in California run by Chevron Corp. Exxon
Corp., Atlantic Richfield Co. and Tosco Corp. have been shut down
since Feb. 23.
California Bound
Nymex gasoline futures, based on delivery in the New York
harbor area, can rise because of a California refinery outage,
even though the West Coast is not well connected to the rest of
the country by pipeline, said Rich Redash, an energy futures
analyst at Prudential Securities in New York.
The U.S. East Coast burns more gasoline that it produces, so
it relies on supplies from Texas and Louisiana to supplement
local refineries' output, Redash said. When California refineries
shut down, some Gulf Coast supplies are diverted to the West
Coast by small pipelines around the Rockies and on tankers
through the Panama Canal. Diverting the Gulf Coast products then
pinches supplies in New York.
''So many refineries are out that there is now a wide window
of arbitrage to pull products out of the Gulf and put those
barrels on the West Coast,'' he said.
U.S. retail gasoline prices are up about 12 percent over the
past month, according to the Energy Department. Pump prices for
regular gasoline average $1.017 a gallon. On the West Coast,
prices have jumped 10 percent in four weeks and were at $1.184 a
gallon, according to the Department of Energy.
Driving Season
Chevron has not said how long the 41,000-barrel-a-day unit
at California's fourth-largest refinery will be out of
commission. The refinery has a capacity of 240,000 barrels a day.
The unit that caught fire was immediately shut down and the
rest of the refinery was operating normally, company officials
said.
The jump in gasoline prices comes after a recent surge in
U.S. demand, as wholesalers and gasoline stations stock up for
the warm weather driving season.
The increase in petroleum product sales is perking up
prospects for refiners as well. Earnings from refining three
barrels of crude oil into one barrel of heating oil and two
barrels of gasoline has more than doubled since last month,
according to Nymex futures prices. The margin on a barrel of oil
jumped from $1.77 on Feb. 11 to more than $4 today.
Crude prices are up 30 percent this month on expectations
that oil producers will cut output enough to eliminate a
worldwide supply glut over the coming months. The Organization of
Petroleum Exporting Countries joined other producers this week in
agreeing to cut world crude supply by 2.7 percent, or more than
2.1 million barrels a day.
April heating oil rose 1.29 cents, or 3.1 percent, to 42.74
cents a gallon on the Nymex, the highest price since May 12.
Heating oil rose 5 percent this week.
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