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Bank of America on Hurricane Sandy

Many are struggling to quantify the loss of life and property that will naturally accompany a storm like Hurricane Sandy, but very few are looking beyond these immediate concerns to see the broader market implications. Among these few are Bank of America Merril Lynch, which had this to say in its commodities briefing this morning:

“Oil markets are focused on the imminent arrival of Hurricane Sandy on the US East Coast, with product cracks up but crude lower in sympathy with a stronger USD and weaker equity markets in Europe and Asia. The impact on oil is not clear cut with the risk of supply disruptions on one hand and demand destruction on the other. Either way, the event is a reminder of how events pose a risk to record low middle distillate stocks in the Atlantic Basin, especially given a decline in refinery capacity this year and expectations for modest growth next year.”

Indeed, gasoline futures went up by 2.1% over the course of the trading day today, rising for the third consecutive day. Refineries on the East Coast remain out of commission for the time being. We at Pumps will continue to monitor the situation.

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