U.S. gasoline rose on Wednesday on concerns about East Coast supply shortages as the energy sector struggled to restore operations disrupted by massive storm Sandy.
Front-month November gasoline futures surged more than 7 percent at points during intraday activity, hitting their highest level since Oct. 12. Wholesale buyers bought up the contract - which expires later on Wednesday - to secure physical supplies of gasoline over the coming weeks, players said.
Even as the aftermath of the devastating storm kept many motorists off the road, more than half of the gasoline service stations in the New York and New Jersey area were shut due to a combination of power outages and depleted supplies.
After disruptions crippled the East Coast fuel supply network, refiners and pipelines continued to restore operations. The focus remained on Phillips 66's 238,000-barrels-per-day Linden, New Jersey plant, where low-lying parts drew flooding. Power cut off by the storm had been returned, however.
"Some wholesalers may be using the expiring NYMEX gasoline contract as a way to get physical supply over the next several weeks," said John Kilduff, partner at Again Capital LLC in New York.
"There are growing concerns about shortages of gasoline at the retail level and the tight gasoline supply situation in the New York Harbor even before the storm."
Gasoline inventories in the Mid-Atlantic region were already 16 percent below last year's levels before the storm hit, according to U.S. government data.
December RBOB gasoline, which will become the front-month contract on Thursday, posted a smaller increase. Oil prices registered small gains in thin trade.
November RBOB gasoline futures traded up 1.6 percent at $2.7722 per gallon at 2:08 p.m. EDT (1808 GMT), off an earlier high of $2.9375. The more-actively traded December contract rose 1.4 percent to $2.6531 per gallon.
Brent crude oil rose 7 cents to trade at $109.15 a barrel, while U.S. crude gained 82 cents to $86.50 a barrel.
Traders awaited further news on the status of U.S. oil inventories for the week to Oct. 26 from U.S. Energy Information Administration data, which was delayed until Thursday by the storm.
A report from the American Petroleum Institute released on Tuesday showed small gains in gasoline and oil stockpiles for the week, while distillate stocks showed a nearly 900,000-barrel drawdown.
(Reporting by Matthew Robinson in New York, Alice Baghdjian in London, Florence Tan in Singapore; Editing by Jim Marshall, David Gregorio and Dale Hudson)