Thursday, April 26, 2012

Gulf Coast Crude Oil Inventories: What’s Up?

AgFax.Com - Your Online Ag News Source


The national average retail price for regular gasoline has fallen for three consecutive weeks for the first time since December, reading $3.87 per gallon on April 23, seven cents per gallon lower than the 2012 peak of $3.94 per gallon on April 2. While global oil markets remain tight, some easing has occurred in recent weeks. Evidence of this easing can be seen in decreases in prompt prices for crude oil, reduced backwardation in the Brent futures curve, and accompanying builds in U.S. crude oil inventories, particularly in the important Gulf Coast (PADD 3) market.

The retreat in global crude prices came after the Brent spot price reached its year-to-date peak of $128 per barrel on March 13. Since that time, the Brent spot price fell about $10 per barrel to about $118 per barrel on April 20. This decline has been concurrent with a decrease in the spread between the 1st and 3rd month Brent futures contracts. On March 13, the five-day average 1st to 3rd month backwardation was $1.05 per barrel; by April 20, it had narrowed to $0.51. As would be expected when backwardation narrows, we have seen strong inventory builds in the United States since March 16, over two-thirds of which has occurred in the Gulf Coast market. Gulf Coast crude inventories have increased 18.1 million barrels (520,000 barrels per day [bbl/d]) to reach 183.3 million barrels (Figure 1); a typical build over this period is about 4.3 million barrels (120,000 bbl/d).

click to enlarge
Lessening incentive to sell barrels into the prompt market is only part of the story behind rising Gulf Coast inventories. Crude oil imports into the Gulf Coast have also risen significantly over the last month. Imports for the week ending April 20 were 4.79 million bbl/d, 430,000 bbl/d more than the week ending March 16. This increase is likely due largely to an increase in volumes from Saudi Arabia being received on the Gulf Coast. While EIA weekly data does not break out country-level weekly imports by area of entry, U.S.-level data show the four-week average crude imports from Saudi Arabia on April 20 at 1.56 million bbl/d, a 190,000-bbl/d increase compared to the four weeks leading up to March 16. Most of this increase likely went to the Gulf Coast, the destination of almost three quarters of Saudi imports in 2011. Some of that volume may have been destined for Motiva’s expanded Port Arthur, TX refinery. As Motiva (a joint venture between Saudi Aramco and Shell) has prepared for the impending startup of its new 325,000-bbl/d expansion, inventory requirements for the refinery have likely contributed to recent builds.



Shifts in regional crude pricing may have attracted some additional imports to the Gulf Coast. During the first ten trading days of March, Gulf Coast benchmark Louisiana Light Sweet (LLS) fetched a premium of about $1.30 per barrel to Brent; for the remainder of March that differential widened to around $3 per barrel on average. Similarly, a strengthening LLS-Bonny Light differential in late March might have pulled some Nigerian barrels across the Atlantic.

Compounding the impact of those new crude flows, Gulf Coast refinery runs, far from keeping up with rising imports, have inched down counter-seasonally by about 10,000 bbl/d from the week ending March 16 to the week ending April 20. Some Gulf Coast refineries may have conducted late-season maintenance in March and early April, after runs had been relatively high through the typically heavy February maintenance period. Crude units expected to come back on line in late April could temporarily draw down some of the recent Gulf Coast inventory builds. However, as crude shipments resume on the Seaway Pipeline following its reversal that is now expected to be completed in mid-May, line fill and new southbound crude flows could lead to structurally higher inventory levels in PADD 3, even as the reversed pipeline starts reducing stocks in Cushing (PADD 2).

Full report

Tags: ,


Leave a Reply

Name and Email Address are required fields. Your email will not be published or shared with third parties.

Sunbelt Ag News

    DTN Livestock Close: Red-Hot Bullishness Storms Through Cattle Complex7-22

    Doane Cotton Close: ICAC Releases Supply and Demand Forecasts7-22

    AFB Grain-Soybean Close: Prices Continue Declines with Aug. Soy Gains7-22

    AFB Cotton Close: Moves Higher on Continued Consolidation7-22

    AFB Rice Close: Futures Turn Higher7-22

    DTN Cotton Close: Settles with Modest Gains7-22

    USDA: Don’t Forget Farm Bill Conservation Compliance Changes7-22

    DTN Grain Close: Markets Hit New Lows7-22

    USDA: Weekly National Peanut Prices7-22

    AgFax Cotton Review: Worst Price Slump in 55 Years; Weather Delays Development7-22

    DTN Livestock Midday: Cattle Locked in Limit Higher Trade7-22

    Good Reports on Corn; Wet Weather Stressing Beans — DTN7-22

    DTN Grain Midday: Corn, Wheat Lower, Soybeans Mixed7-22

    Cattle: Nebraska Study Finds No Ill Effects from Zilmax — DTN7-22

    South Korea Importers Returning to U.S. Corn, DDGS — DTN7-22

    DTN Cotton Open: Trades Above Highs of Prior 3 Days7-22

    DTN Livestock Open: Futures Predicted to Start Mixed7-22

    DTN Grain Open: Futures Show Small Gains7-22

    Keith Good: Soybeans, Corn Garner High Condition Ratings, Lower Prices7-22

    Oklahoma Farmer Modifies Business Choices Due to Wet Spring – DTN7-21

    Cover Crops a Good Replacement in Weather Damaged Fields – DTN7-21

    AgFax Rice Review: UN Prescribes Arsenic Levels; Armyworms Abound in MS7-21

    Arkansas: Emerald Ash Borer Turns Up to Threaten Ash Trees7-21

    Good on Grain: Corn Price Premiums Continue to Fade7-21

    It’s Been 18 Years – What’s Happened in Herbicide Tolerant and Insect Resistant Crops?7-21

    USDA Creates Soybeans Out of Thin Air, Sorta — DTN7-21

    Mississippi Wheat: MSU Releases Variety Trial Data7-21

    Flint on Crops: Bacterial Blight Makes a Comeback in Cotton7-21

    California Cotton: Crop Moving Fast. Strong Yield Potential – AgFax7-20

    Peanut Insects Forcing Decisions In Some Southern Fields – AgFax7-19

    Florida Cotton: Fertilizing Late Planted Crop7-18

    Rose on Cotton: Future Holds Possibility of New Crop Sales Increase7-18

    Rice Market: USDA Report Leaves Unanswered Questions7-18

    Rice Crop: Texas Crop Heading; Arkansas Recovering From Heavy Rains7-18

    Midwest: Late-Summer Drought Unlikely – DTN7-18

    Do Bigger Farms Really Have Lower Costs? Not Really.7-18

    Welch on Wheat: Production Increased, Usage Decreased7-18

    Welch on Grain: Higher Than Expected Corn Stocks7-18

    Cleveland on Cotton: The Low Price Cure? Maybe.7-18

    USDA: Peanut Price Highlights7-18

    Georgia Cotton Insect Advisor: New App for Aid with Stink Bug Decisions7-18

    Documentation of Farm Assets, Contracts Aids Survivors — DTN7-18

    AgFax Wildlife Review: Hunting Wild Hogs in the Air and on the Air7-18

    DTN Dried Distillers Grains: Fall in Prices Slowing Down?7-18

    Georgia: Vidalia Onion Growers Battling Yellow Bud Disease7-18

    Interest Rates Have Been Too Low for Too Long – DTN7-17

    Brazil Ag Investments Switch to Logistics, Technology – DTN7-17

    Herbicide Resistance: Exploring Weed Control Options – DTN7-17

    Mississippi: MSU Hires International Rice Breeder7-17

    Mississippi: Late-Season Delta Field Day, Stoneville, Aug. 137-17

    U.S. Grain Transportation: All Mississippi River Locks Open7-17

    North Carolina: Soil Information Class Available to Public Online7-17

    Mississippi: Irrigation Turnrow Talks, July 23-257-17

    U.S. Drought Outlook: Improvements Expected in Plains, Southwest7-17

    North Carolina Corn: Southern Rust Alert, Spray Susceptible Hybrids7-17

    Keith Good: Beige Book — Observations on Ag Economy7-17

    U.S. Energy: California’s Low Carbon Fuel Standard Remains in Effect7-17

    Sunbelt Ag Events

    Rice News

     

    About Us

    AgFax.Com covers agricultural trends and production topics, with an emphasis on news about cotton, rice, peanuts, corn, soybeans, wheat and tree crops, including almonds, pecans, walnuts and pistachios.

      

    This site also serves as the on-line presence of electronic crop and pest reports published by AgFax Media LLC (formerly Looking South Communications).

        

    Click here to subscribe to our free reports.

      

    We provide early warnings and confirmations about pests, diseases and other factors that influence yield. Our goal is to quickly provide farmers and crop advisors with information needed to make better and more profitable decisions.

         

    Our free weekly crop and pest advisories include:

    • AgFax Midsouth Cotton, covering cotton production and news in Alabama, Arkansas, Louisiana, Mississippi, Tennessee and Missouri.

    • AgFax Southeast Cotton, covering cotton production and news in Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia.

    • AgFax Southwest Cotton (new for 2013!), covering cotton production and news in Texas, Oklahoma, Kansas and New Mexico.

    • AgFax West (formerly MiteFax: SJV Cotton), covering California cotton, alfalfa, tomatoes and other non-permanent crops in California's Central Valley.

    • AgFax Rice covering rice production and news in Arkansas, Louisiana, Mississippi, Missouri and Texas.

    • AgFax Peanuts, covering peanut production in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginia.

    • AgFax Southern Grain: covering soybeans, corn, milo and small grains in Southern states.

    • AgFax Almonds, covering almonds, pistachios, walnuts and other tree crops in California's Central Valley.

    • AgCom 101, providing guidance to ag professionals involved in social media.

    Our newsletters are sponsored by the following companies: FMC Corporation Chemtura Dow AgroSciences.

          

    Mission statement:

    Make it as easy as possible for our community of readers to find and/or receive needed information.

              

    Contact Information:

    AgFax Media. LLC

    142 Westlake Drive Brandon, MS 39047

    601-992-9488 Office 601-992-3503 Fax

    Owen Taylor Debra L. Ferguson Laurie Courtney

          

    Circulation Questions?

    Contact Laurie Courtney