While the markets remain closed, speculation about the fallout from hurricane Sandy continues. The price of gas is up in the air as refinery closures may negatively impact supply, but a cut to demand could soften the blow for consumers.
Refineries operated by Phillips 66 (NYSE:PSX), Hess (NYSE:HES), and NuStar (NYSE:NS) have completely shut down because of the storm. With Sandy expected to make landfall late Monday or early Tuesday, refineries could be closed as late as Wednesday or Thursday. This disruption in supply has many worried that gasoline prices will shoot up.
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According to CNN, Stephen Schork, editor of The Schork Report, said that, “we don’t have the fallback we had during Hurricane Katrina. If we see a one-week delay in output, the good times might be over.”
U.S. gasoline futures jumped as much as 4 percent on Monday, climbing as high as $2.81 per gallon. The price has come down in the afternoon, as drivers stay off the road and gas stations board up.
“Markets will be watching for reports of damage to energy infrastructure, notably refineries post-Sandy, given the state of extremely low gasoil inventories as we move into the winter season,” said Deutsche Bank analysts, according to Reuters.
Tom Kloza, chief analyst at the Oil Price Information Service, expects the storm to kill demand, dampening the impact of supply issues. “My read is that this storm is going to be one of the biggest demand destroyers in my lifetime. It’s destroying a lot of demand for jet fuel, for gasoline, for diesel,” he told CNN.
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