Nymex Announces 2.7% Oxygen Specification for Gasoline Futures Contracts

Strategic Insights -

In a move that buoyed the market, the New York Mercantile Exchange (Nymex) confirmed that it would maintain a 2.7% oxygen specification for its gasoline futures contracts, prompting a 1.4 cent increase for the Nymex March gasoline contract. The news came as traders breathed a sigh of relief after fears that the current contracts might be dropped in favor of a contract matching New Jersey's new oxygen specifications. Simultaneously, bad weather in the Northeast fueled a surge in heating oil and crude prices, with the March natural gas contract rising 4.7 cents to $1.482/MMBtu.

Key Takeaways:

  • The Nymex announced a 2.7% oxygen specification for its gasoline futures contracts for March and April 1995, which resulted in a 1.4 cent increase for the Nymex March gasoline contract.
  • The Environmental Protection Agency's (EPA) approval of New Jersey's plan to shorten its winter oxygenates season sparked concerns that the current contracts might be dropped.
  • Ric Navy, a vice president at Paribas Futures Inc., stated that the market was "badly beaten" before the Nymex announcement, but prices rebounded after the news.
  • Monica D. Kelly, an analyst at Pegasus Econometric Group, believed that gasoline prices have stalled until more is known, and many traders are hesitant to touch the gasoline contract due to its complexity and volatility.
  • The March light, sweet crude contract rose 24 cents to settle at $18.78/bbl, while the March No. 2 heating oil contract rose 0.89 cents to settle at 49.44 cents/gallon.
  • Bad weather in the Northeast, which has canceled and delayed crude shipments from the North Sea, has also contributed to the rise in gasoline prices.

Statistics:

  • The Nymex March gasoline contract increased by 1.4 cents.
  • The March light, sweet crude contract rose 24 cents to settle at $18.78/bbl.
  • The March No. 2 heating oil contract rose 0.89 cents to settle at 49.44 cents/gallon.
  • The March natural gas contract rose 4.7 cents to $1.482/MMBtu.
  • Crude shipments from the North Sea have been canceled and delayed due to bad weather.

Sources:

  • The New York Mercantile Exchange (Nymex) announcement.
  • Ric Navy, Vice President, Paribas Futures Inc. (cited by unnamed article author).
  • Monica D. Kelly, Analyst, Pegasus Econometric Group (cited by unnamed article author).
  • Unnamed article author (Washington).