NEW YORK (Reuters) - The CME Group said on Wednesday it had declared a “force majeure” event to allow only RBOB gasoline to be delivered against the NYMEX October 2016 futures contract.
The U.S. Environmental Protection Agency (EPA) had issued a waiver on Sept. 16, after a leak on the Colonial Pipeline in Alabama, that allowed delivery of conventional gasoline and related blendstocks in New Jersey.
However, that waiver was not extended to New York and Connecticut, which led the CME to declare a ‘force majeure’ that ensured that only RBOB gasoline was delivered against the NYMEX RBOB October contract.
A force majeure event is an unforeseen event that prevents a party from fulfilling a contract. The CME declaration is not supply related, but relates to a change in its rules, said Daniel Brusstar, CME’s senior director of energy research in New York.
The so-called force majeure will remain in effect until the expiration of the EPA’s waiver, the CME said.
The EPA had issued a series of waivers due to the biggest gasoline spill on Colonial Pipeline in nearly two decades, which squeezed supply in several states in southeast United States and led to higher prices at the pump.
An emergency fuel waiver of a federal standard requiring 7.8 psi Reid Vapor Pressure, was also issued by the EPA, in a response to a disruption in the supply of low-volatility fuel in the Atlanta and Nashville areas.
The Colonial Pipeline, operator of the largest refined products pipeline system in the United States, last week restarted its main gasoline line bringing fuel to the East Coast after an up to 8,000-barrel leak in Alabama.
Reporting by Devika Krishna Kumar and Catherine Ngai; editing by David Gregorio
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