Gasoline futures declined Friday after surging to the highest price in three and a half weeks on Thursday amid hurricane fears.
The front-month RBOB gasoline contract closed at $2.93 per gallon Friday, down 3 cents, or 1.1 percent. The more actively traded contract for October delivery closed at $2.78 per gallon, down nearly 2 cents, or 0.7 percent. For the week, gasoline futures were up nearly 3 percent.
While the risk of flooding and power outages from Hurricane Irene is a serious consideration for East Coast refineries, which process about 1.3 million barrels of crude oil a day, no refiners have announced they are starting to shut down yet.
The U.S. Coast Guard is closely monitoring the storm as well but has not yet announced closure of the New York Harbor, where 400,000 barrels per day of gasoline imports come in every day. Other terminals from Maine to Connecticut, through which much of the crude oil for East Coast refineries is shipped, are operating normally.
“The port (for shipping traffic) is not scheduled to be closed at this time. It will remain open until further notice,” according to a statement from the Coast Guard.
Charles Drevna, the president of the National Petrochemicals and Refiners Association, told CNBC earlier this morning that refiners were scaling back operationsbut decisions to partially or fully shut down would be made on a case-by-case basis. All refineries and terminals have contingency plans in place, which include a pre-emptive shutdown of operations and precautionary refining rate cuts.
Two refineries, ConocoPhillips in Trainer, Pa., and PBF Energy in Delaware City, Del., will be reducing processing rates later today, according to energy analyst Andy Lipow.
Other major refinery locations on the East Coast "will make a decision late tonight/early Saturday on continuing operations," Lipow says. "Many of them might decide to go into what is called hot oil circulation which means that they keep the oil warm, and circulate it through the processing units," he said. It's like "idling your car engine in the driveway rather than driving it somewhere. This allows the refineries to begin producing gasoline and diesel quickly after the storm passes."
Hess intends to operate its 70,000-b/d Port Reading, N.J., refinery through the storm this weekend and Sunoco continues to monitor the storm closely, according to OPIS.
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