Gasoline futures gained on Tuesday, as a problem at a refinery in the Caribbean contributed to tight supplies in the heavily populated Northeast and promised to help keep pump prices up heading into the New Year.
Gasoline rose 2.07 cents to close at $2.3981 a gallon on the New York Mercantile Exchange. Crude oil prices climbed as well, adding 45 cents to settle at $89.82 a barrel.
The Hovensa refinery at St. Croix, Virgin Islands, has had trouble restarting a key unit used to process crude oil. It was shut down several weeks ago, and repairs may take another week, according to Cameron Hanover energy consulting agency. The closure tightened supplies at the New York petroleum product hub, although stockpiles remain plentiful in other parts of the country.
Tradition Energy analyst Gene McGillian said there also are reports of ships with fuel cargoes arriving late, which also helps support gasoline prices.
At the pump, the price for a gallon of regular gasoline was $2.983 on Tuesday, according to AAA, Wright Express and the Oil Price Information Service. That's up nearly 11 cents from a month ago and about 40 cents higher than a year ago.
Meanwhile, oil traders remained optimistic about improving demand for energy products as millions of Americans travel for the holidays. And heating oil purchases are expected to rise 4.6 percent above normal for this time of year because of cold weather, according to a research note from MF Global.
The government issues its weekly report on the nation's petroleum supplies on Wednesday. According to Platts, the energy information arm of McGraw-Hill Co., analysts expect crude oil supplies to fall by 2.4 million barrels. Shrinking oil inventories can point to higher prices, but rising prices so far are mainly fired by hopes for stronger oil and gas demand in the near future.
"The underlying facts of the market really haven't changed too much. A lot of the upside potential of the market is predicated on the economic recovery," McGillian said.
PFGBest analyst Phil Flynn speculated that an improving economy could limit oil price rises, if the dollar grows stronger. Since oil and other commodities are priced in dollars, a stronger dollar makes them more expensive for traders who use other currencies.
In other Nymex trading, heating oil added 2.69 cents to settle at $2.5164 a gallon and natural gas dropped 17.8 cents to settle at $4.059 per 1,000 cubic feet.
In London, Brent crude rose 46 cents to settle at $93.20 a barrel on the ICE Futures exchange.