| NEW YORK
NEW YORK U.S. gasoline futures rallied even as Brent and U.S. crude retreated on Monday as over two-thirds of the East Coast refining sector shut down ahead of Hurricane Sandy.
U.S. heating oil futures also gained, touching the highest level relative to U.S. crude oil on record as dealers hedged against the risk of power outages and flooding that could damage refineries and keep production shut for weeks.
The crack spread, the difference in value between a barrel heating oil and a barrel of crude oil, touched $45.15 a barrel on Thursday.
"Markets will be watching for reports of damage to energy infrastructure, notably refineries, post-Sandy given the state of extremely low gasoil inventories as we move into winter season," Deutsche Bank analysts said.
Front-month RBOB gasoline futures reached $2.8115 a gallon on Monday, the highest price since October 17, before paring gains as traders factored in the reduced demand for fuel with the almost total shut-down of eastern seaboard roads and airports.
By 1 p.m. EST (1700 GMT), November gasoline futures were up 4.26 cents, or 1.5 percent, at $2.7417 a gallon.
Nearly 70 percent of the region's refining capacity was on track to be idled, including the Phillips 66 (PSX.N) 238,000-barrel per day Bayway refinery in New Jersey.
U.S. November heating oil was up 1.97 cents at $3.1175 a gallon.
CRUDE FUTURES PRESSURED
U.S. crude futures retreated as ample domestic crude supply and the sharp reduction in crude oil needed by refineries shut by the hurricane weighed on prices.
Brent December crude fell 45 cents to $109.10 a barrel, having reached $110.26. Brent on Monday was on pace to post a more than 2 percent loss for the month, a second straight monthly loss.
U.S. December crude fell $1.20 to $85.08 a barrel. Monday's $84.66 intraday low was the lowest price since July.
U.S. crude futures were on track to end October down more than 7 percent, after sliding more than 4 percent in September.
"Demand is going to be negated with the refineries not running and people are hunkering down all over the region, not driving," said Mark Waggoner, president at Excel Futures Inc.
Fifty million people from the U.S. Mid-Atlantic to Canada were in the path of Hurricane Sandy. Forecasting services expected the storm to strike the New Jersey shore near Atlantic City on Monday night.
(Additional reporting by Christopher Johnson and Alice Baghdjian in London and Florence Tan in Singapore; Editing by Marguerita Choy)