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Shut-ins at East Coat refineries appear to be causing gas prices to rise today. But Hurricane Sandy will likely cause oil and gas prices to drop as drivers avoid roads. The effect of what analysts refer to as “demand destruction” will likely be felt later this week, Reuters’ energy analyst John Kemp writes.
Hurricane Sandy will therefore depress regional fuel demand more than supply and should be bearish for crude and product prices at the margin, provided there is no serious and sustained damage to the refineries clustered in Pennsylvania and New Jersey.
Bloomberg’s Grant Smith and Ramsey Al-Rikabi report Phillips 66, NuStar and Hess are all shutting or reducing output at New Jersey refineries as a precaution against the storm.
Gasoline prices were higher on the news but West Texas Intermediate futures fell for the first time in three days, they say.