NYMEX October RBOB futures settled sharply higher Wednesday, bucking the downtrend of the rest of the complex, on reports of an explosion at Irving Oil's Saint John refinery in New Brunswick, Canada.
October RBOB settled 11.4 cents higher at $3.0811/gal. It traded up to a five-week high of $3.0874/gal.
A small explosion occurred in a small tank at the refinery at the 300,000 b/d Saint John refinery Wednesday morning. The explosion was linked to an over-pressurized tank, which was undergoing maintenance work, the company said in a statement.
The plant was cleared to resume normal operations and due to the planned turnaround work taking place, no impact to production was anticipated.
The company said one employee suffered minor injuries.
The refinery, a major supplier of gasoline to the US Atlantic Coast, has had refinery issues in recent weeks.
The 95,000 b/d fluid catalytic cracker at the refinery was shut for repairs last week and has kept gasoline in the physical and futures markets well supported.
Gasoline inventories in the Atlantic Coast, home of the New York delivery point for RBOB futures, fell by 1 million barrels last week to 46.8 million barrels, according to data released Wednesday by the US Energy Information Administration, which also lent continued support to an already bullish RBOB market.
Stocks along the Atlantic Coast were at their lowest level in four years, based on the latest EIA data, and were more than 6.5 million barrels, or about 12%, below the five-year average for the reporting week ending September 21.
The ongoing tightness along the Atlantic Coast has substantially widened the backwardation in the front of the NYMEX RBOB futures curve as prompt supplies of gasoline remain tight.
The October/November backwardation reached a high of 20.99 cents/gal on Wednesday then settled at 20.7 cents/gal. That's up from a recent low of 7.2 cents/gal just two weeks ago.
For crude, futures settled lower as concerns over eurozone debt trumped an unexpected decline in US oil inventories for last week.
In early trade, November crude fell below $90/b for the first time in eight weeks. The contract settled at $89.98/b, down $1.39.
"The fragility of the euro zone equity markets is being highlighted for a second day, as losses mount in reaction to the demonstrated unwillingness of Spaniards and Greeks to the austerity measures required by Germany for their respective bailouts," said John Kilduff of Again Capital in a note. "Both Germany and the ECB are losing patience with Spain. So, here we go again. It looks like another trip to the precipice is in store."
Crude futures mostly shrugged off a surprise 2.4 million-barrel draw in US crude inventories to 365.180 million barrels for the week ending September 21, according to EIA data Wednesday.
Analysts polled by Platts were expecting a 1.5 million-barrel build in crude stocks.
ICE November Brent settled 41 cents lower at $110.04/b and NYMEX October heating oil settled 18 points lower at $3.1068/gal.
