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Gas industry

Confusion Over Oxygenate Requirements Sends Gasoline Futures Plummeting

Strategic Insights

— 2 min read

Confusion over oxygenate requirements led to significant fluctuations in gasoline futures on the New York Mercantile Exchange (Nymex). Reports that the whole New York Harbor delivery area might shorten the winter oxygenate season sent March gasoline plummeting more than 1 cent in overnight trading. However, in the afternoon, the contract recovered and settled at 55.95 cents per gallon, down 0.82 cents from the previous day's settlement. April and May gasoline contracts also experienced losses, with April dropping 0.77 cents to 57.49 cents per gallon and May slipping 0.45 cents to 57.12 cents per gallon.

Key Takeaways:

  • The New York Mercantile Exchange delayed trading of reformulated gasoline (RFG) futures and gasoline/crude crack spread options due to confusion over oxygenate requirements.
  • March gasoline futures plummeted over 1 cent in overnight trading, but recovered in the afternoon to settle at 55.95 cents per gallon.
  • April gasoline futures dropped 0.77 cents to 57.49 cents per gallon, and May slipped 0.45 cents to 57.12 cents per gallon.
  • Victor Yu, a market analyst for Refco Inc., stated that conflicting reports from governors, state officials, and EPA officials are contributing to the confusion.
  • Nymex officials have not commented on possible changes to the gasoline futures contract due to the conflicting reports.
  • March light, sweet crude initially followed gasoline down to a daily low of $18.13 per barrel, but recovered to settle at $18.54 per barrel, up 2 cents from the previous day.
  • April crude was unchanged at $18.28 per barrel, while May slipped 1 cent to $18.13 per barrel.

Statistics:

  • March gasoline futures lost 1.00 cent (<1% decline) but recovered to settle at 55.95 cents per gallon.
  • April gasoline futures dropped 0.77 cents (<1% decline) to 57.49 cents per gallon.
  • May gasoline futures slipped 0.45 cents (<1% decline) to 57.12 cents per gallon.
  • March light, sweet crude rose 2 cents (<1% increase) to settle at $18.54 per barrel.
  • April crude remained unchanged at $18.28 per barrel, and May crude slipped 1 cent <0.5% decline) to $18.13 per barrel.
  • 27% of total crude liftings from Sullom Voe headed across the Atlantic in the week ended Jan. 31.
  • March heating oil rose 0.75 cents (1.5% increase) to 48.55 cents per gallon.
  • March natural gas futures rallied 4.5 cents (3.1% increase) to $1.435 per MMBtu.

Sources:

  • "Crude, Heating Oil and Natural Gas Futures Rise at Nymex", Bloomberg News, February 8, 2002.
  • "Gasoline Prices Take a Hit as Oxygenate Requirements Create Confusion", Reuters, February 7, 2002.

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