US Congress eyes Northeast Gasoline Supply Reserve sale, closure

A draft funding bill likely to pass in Congress this week could see the United States sell 1 million barrels from its Northeast Gasoline Supply Reserve this year, and then promptly shut it down.

The reserve in New York Harbor holds 700,000 barrels of gasoline; Boston, Massachusetts, holds 200,000 barrels; and South Portland, Maine holds 100,000 barrels.

Market participants are split on the impact of an additional 1 million barrels entering the market. One trader said the impact would be "very little" while another added that it would depend "which month it's sold in."

Platts assessed NYH unleaded 87 barge cargo at 243.57 cents/gal on March 4, down 0.620 cents from the session prior. Platts is part of S&P Global Commodity Insights.

The US Atlantic Coast is structurally short gasoline, meaning demand outstrips local supply, making the region vulnerable to supply shocks. The high-demand Northeast region is supplied mainly by the Colonial Pipeline, which carries US Gulf Coast products as far north as Linden, NJ. Points further north are supplied primarily by barge or waterborne imports.

USAC gasoline stocks stood at 63.6 million barrels in the week ended Feb. 23, according to the latest US Energy Information Administration data, and were 1.6% below the five-year average for this time of year.

The reserve was created by the Department of Energy in 2014 after Superstorm Sandy wreaked havoc on gasoline markets in the northeastern region two years earlier. The storm damaged two refineries, shut down more than 40 terminals in the New York Harbor due to damage, and left some gasoline stations with no fuel for as long as 30 days.