Colonial Pipeline reverts to rationing on pipeline

Colonial Pipeline is back to business as usual, with more demand to move fuels to the East Coast from Houston than it has space for. Gasoline prices in the East Coast are still firm after rallying to the strongest levels this year in July as inventories draw down from a record and a spate of refinery issues.

Colonial's main gasoline line, with a capacity of about 1.2 million bpd, connects the refinery hub of the Gulf Coast to the East Coast and news of increased flows to the region sent US gasoline futures tumbling to a near two week low. Cash gasoline prices in the New York harbour region also eased, traders and brokers said.

The company said it would allocate space on the pipeline segment north of Collins, Mississippi for the next five day shipping cycle, as it typically does when nominations exceed capacity.

"This is being called based upon current nominations allowing us to maintain a five day shipping frequency," a spokeswoman for Colonial Pipeline said.

Demand to ship fuel on the line fell below capacity for the first time in six years in June as traders and refiners boosted exports instead of shipping to the populous US northeast where stockpiles were bloated.

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