Minor New England gasoline shortages seen as slow-moving Henri stalls after landfall

Now Tropical Depression Henri is expected to create some minor gasoline shortages amid higher US Atlantic Coast demand, low gasoline inventories and planned refinery work, multiple sources said Aug. 23.

Henri made landfall as a tropical storm near Westerly, Rhode Island, on Aug. 22, after weakening from a Category 1 hurricane. But out of precaution and uncertainty over Henri's route, the US Coast Guard had begun closing down US Atlantic Coast ports prior to the storm's arrival.

This closure of the ports along the USAC from New York Harbor north to Massachusetts is expected to slow some waterborne shipments of gasoline and diesel supply to regional terminals.

Related content: Market Movers Americas, Aug. 23-27: Henri brings heavy rains, wind to New England

Gasoline demand, meanwhile, ticked higher over the weekend as mandatory evacuation orders for low-lying areas including popular beach communities up and down the coast forced residents to move inland.

"Looking at our daily gasoline demand levels, PADD 1 [USAC] saw a surge of 5.1% [on Aug. 21 vs the prior day] , easily the winner among PADDs. It wouldn't be surprising to see temporary allocations just to get more outlets fuel, but it would surprise me if they last more than say a week," said Patrick DeHaan, head of petroleum analysis with Gasbuddy.com, which provides real-time information on gasoline prices across the US. "We have seen a few stations running out, but it hasn't been widespread," he added.

Given the limited evacuations and no refinery disruption, "any station outages should be short lived more to do with logistics," DeHaan said.

" ...this is very mundane compared to larger storms or outages like the Colonial outage earlier this year. This should mean a very quick recovery time for any outages at the station level," he added.

ExxonMobil issues fuel allocation orders

Rhode Island, Connecticut and to a lesser extent Massachusetts bore the brunt of the port closures and evacuations.

ExxonMobil, which operates four refined product terminals in New England, issued allocation orders for some customers in the affected areas.

"Due to weather, we have temporarily placed customers at a number of terminals on allocation for some products, in accordance with the terms of our current supply contracts," said ExxonMobil spokeswoman Julie King in an Aug. 22 email.

"Efforts are under way to transport refined products from unaffected regions to communities and customers in the most severely impacted markets," she added.

Other regional terminal operators reported little to no impact on operations.

A spokeswoman for Energy Transfer's Sunoco said in an Aug. 23 email there was no impact on their operations.

Kinder Morgan, another regional terminal operator, reported the same but noted there were other factors at play.

"I was told there are no impacts to our operations, but logistics are a complicated thing," said Melissa Ruiz, a Kinder Morgan spokeswoman, adding the company does not speak about parts of the logistics chain outside of our operations.

Low stocks, planned refinery work contribute to tightness

While no storm-related refinery disruption was reported, regional supply of gasoline and diesel is constrained by refinery maintenance. Market sources said planned work was underway at PBF's 182,200 b/d Delaware City, Delaware, refinery.

And USAC gasoline inventories were also low, dropping to 58.7 million barrels for the week ended Aug. 13 from 61.6 million barrels the week earlier, according to Energy Information Administration data.

New England gasoline inventories fell to 4.46 million barrels during this time period, from the 4.89 million b/d the week earlier, EIA data showed.

EIA data also showed USAC gasoline imports for the week ended Aug. 13 were nearly half of what they were the week earlier, at 441,000 b/d compared with 798,000 b/d for the week earlier.

Slow moving Henri drops record rainfall

After making landfall, Henri was seen moving very slowly across the region, bringing record rainfall resulting in flooding to states from New Jersey up to Rhode Island.

Emergency declarations were approved by President Joe Biden for Connecticut, Rhode Island and New York, allowing the states receive aid from the Federal Emergency Management Agency to pay for storm damage.

Heavy rain was expected to continue. The National Weather Service forecast on Aug. 23 "excessive rainfall forecasts" for portions of the Northeastern US, but mostly impacting Connecticut and Rhode Island where 2 to 5 inches have already fallen.

Power outages – which impacted about 100,000 customers in Rhode Island at their peak– are being resolved, with just under 42,000 remaining midday Aug. 23 out of the over 500,000 tracked, according to Poweroutage.us.

However, the Coast Guard has lifted port restrictions allowing normal maritime operations to resume at the impacted ports and refined products imports to resume.

Market sources said the RBOB priced in the New York Harbor was down 2 cents by midday Aug. 23, after settling at $2.08/gal on Aug. 20, according to Platts assessments, which was a 6 cent/gal premium over the front-month NYMEX RBOB contract.

However, prices of CBOB were still climbing, they said. Little impact was seen on ULSD, according to market sources.