New York Harbor

As the Atlantic hurricane season churns out storms that regularly threaten the U.S. Gulf Coast, it can be easy to forget that the East Coast — an important refining center and refined-products market — is not immune from their impact. A dozen years ago this month, Superstorm Sandy roared ashore in New Jersey, wreaking havoc with storm surges and fierce winds that stretched for 1,000 miles. While the East Coast lacks the Gulf Coast’s concentration of energy infrastructure, it is home to the critical New York Harbor (NYH) market. In today’s RBN blog, we will examine how storms have affected the refining sector on the East Coast. 

The New York market for residential and commercial heating oil is traditionally tight in the winter months when demand exceeds local production and supplies are supplemented from storage and inflows/imports from outside the region. Coming into winter this year inventory levels were above normal for the time of year and market prices are in contango (a condition where future prices are higher than today) – encouraging further storage. Today we explain how the result is an extension of traditional seasonal storage trade opportunities and a shortage of available inventory capacity.

Freezing weather along the Atlantic Coast has disrupted refinery operations threatening supplies of refined products – in particular distillates – in an already tightly balanced market. The resultant spike in heating oil prices has encouraged European traders to ship cargoes to New York – a reversal of flow patterns seen in recent years. Today we look at northeast distillate fundamentals and explain why European imports are headed across the pond.

The NYMEX New York October gasoline contract expired last Friday at $3.34/Gal, up 13 percent during the week from $2.91/Gal last Monday (September 24, 2012). In contrast the November contract closed 42 cents lower than October on Friday at  $2.92/Gal. The sudden jump in October New York gasoline prices during the last week of trading was caused by severe supply problems in the Northeast US. This week new cargoes en-route to New York have calmed market fears but the disruptions look set to repeat in a tightly balanced market. Today we investigate what happened.