Post-Sandy Focus Shifting to Distillate Markets

With the New York City area facing severe shortages of gasoline following Hurricane Sandy — featuring the unwanted 1970s nostalgia of long lines at gas stations and now, odd-even day gasoline rationing — the regional diesel and heating oil markets have not captured the same level of public attention. This week’s storm that brought snow to the region, however, provided an abrupt reminder of approaching winter, and brought distillate inventories back into focus. In fact, New York City temporarily lifted the New York State requirement to burn heating oil with less than 15 ppm sulphur that began this summer, easing shortages. Despite the media focus on gasoline, the diesel and heating oil markets have had a profound effect on the Atlantic Basin MR market and should continue to influence its equilibrium post-Sandy. Download here