OIL FUTURES: Gasoline Surges To Highest In 5 Months; Oil Flat

Published: Jan 27, 2012

By Dan Strumpf
Of DOW JONES NEWSWIRES


NEW YORK (Dow Jones)--Gasoline futures surged to their highest level in five months Friday, even as crude-oil futures were little changed, after a key gasoline unit was taken off line at a New Jersey refinery.

The unit at ConocoPhillips's (COP) Bayway refinery in New Jersey was taken off line overnight, according to a New York-based trader. A spokesman for ConocoPhillips declined to comment.

The news sent front-month February reformulated gasoline blendstock, or RBOB, soaring to settle 8.02 cents, or 2.8%, higher at $2.9268 a gallon. That marks the contract's highest settlement since Aug. 31--up 5.4% on four straight sessions of gains.

Light, sweet crude for March delivery settled 14 cents, or 0.1%, lower at $99.56 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled up 67 cents, or 0.6%, at $111.46 a barrel.

Gasoline's gains follow a string of refinery woes in recent weeks. Also on Friday, Swiss refining giant Petroplus Holdings AG said that it filed for insolvency. The move had been widely anticipated for the company, which owns five refineries across Europe.

Last week, Hess Corp. (HES) said it planned to shut down its Hovensa LLC refinery in St. Croix, U.S. Virgin Islands.

"You had a pile-on effect that all joined together to lift this market," said Brian Milne, refined fuels editor at Telvent DTN. "Everybody's talking about the tightness in the [gasoline] market."

The refining industry has been beset by troubles recently, as the global economic slowdown has pummeled demand for refined fuels like gasoline. Supply concerns, meanwhile, have kept oil prices elevated, squeezing margins for companies that churn crude into refined products.

Despite the jump in gasoline prices, oil futures were little changed Friday, even after the government said the U.S. economy grew 2.8% in the fourth quarter.

The figure was smaller than expected, dashing hopes for a bigger expansion in the world's largest oil consumer. But it represented the fastest rate of growth in more than a year and a half, signaling that the recovery is gaining steam.

This weekend, market participants are likely to focus their attention on developments between Iran and the West. Iran's parliament is set to debate on Sunday an immediate halt of oil exports to the European Union, which would end an estimated 600,000 barrels a day of crude exports to the region.

"Guys were a little bit taken aback overnight" by reports about Iran's plans, said Pete Donovan, vice president at Vantage Trading, an options brokerage on the Nymex floor. "We're getting a little bit support on Iran."

The supply threat, if carried out, would effectively pre-empt the EU's decision earlier this week to ban Iranian imports, but not until July 1. The long lead time was meant to give major importers like Greece and Italy time to find additional sources of supplies.

February heating oil settled 1.69 cents, or 0.6%, higher at $3.0704 a gallon.

More information on settlements and highs and lows for futures on Nymex and ICE platforms can be found by searching for the following headlines:


Nymex Light Crude Oil Close
Nymex Harbor RBOB Gasoline Close
Nymex Heating Oil Close
ICE Brent Crude Oil Close
ICE Gas Oil Close



-By Dan Strumpf, Dow Jones Newswires; 212-416-2818; dan.strumpf@dowjones.com