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By Barbara Powell
NEW YORK - Gasoline fell on speculation that demand will decline on the East Coast as Atlantic superstorm Sandy causes widespread flooding and power outages.
Futures sank as at least 3.6 million homes and businesses lost power yesterday, the U.S. Energy Department said. Philadelphia Energy Solutions said it is restoring normal operations at its 355,000-barrel-a-day refinery in Pennsylvania. The storm came ashore in southern New Jersey at 8 p.m. local time yesterday, driving floodwaters to life-threatening levels.
“It’s too early to tell if major damage was done to the refineries but we do know nobody is driving up and down the East Coast,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “This could be the biggest demand destruction event short-term. It will take time to get back to normal.”
Gasoline for November delivery fell 3.68 cents, or 1.3 percent, to $2.72 a gallon at 12:23 p.m. on the New York Mercantile Exchange. All trading was electronic as the Nymex floor is closed a second day for the storm.
Futures jumped 2.1 percent yesterday as six East Coast refineries accounting for 94 percent of regional processing capacity shut or reduced rates in advance of the storm, according to information from the companies and from the Energy Department. Terminals, ports and sections of product pipelines also shut.
“The market is falling in anticipation of the return of supply,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
Refiners in the region, which includes New York Harbor, the delivery point for Nymex futures, can process 1.29 million barrels a day, according to data compiled by Bloomberg. East Coast, or Padd 1, gasoline supplies were 9.1 percent below year- earlier levels in the week ended Oct. 19, Energy Department data show.
Heating oil for November delivery fell 2.82 cents, or 0.9 percent, to $3.087 a gallon on the exchange.
The average nationwide price for regular gasoline at the pump declined 0.9 cent to $3.534 a gallon yesterday, AAA, the largest U.S. motoring organization, said today on its website. That’s the lowest level since Aug. 1. Prices have fallen every day since Oct. 10. The pump price reached a 2012 high of $3.936 on April 4.