Blog May 10, 2016

Cushing, OK, crude inventories reached a record high May 3, 2016 of more than 70mn bbls after refinery outages in the U.S. Midcontinent displaced barrels to both storage tanks and the U.S. Gulf Coast. Without significant new storage capacity, Midcontinent stocks could reach maximum operating capacity this year, according to Genscape.

Cushing inventories increased 1.3mn bbls week-on-week following the spring maintenance season, which also caused Patoka, IL, stocks to climb 1.4mn bbls to a record high above 11mn bbls week ending April 29, 2016.

Midcontinent crude stocks reached record levels week ending April 29 following outages at several refineries in the regionMeanwhile, along the Gulf Coast, waterborne loadings to international and domestic destinations recently hit a 2016 high while stocks increased in the Midcontinent.

Cushing stocks border maximum capacity utilization

Inventories at Cushing are close to maximum operating capacity, and on May 3, 2016 reached utilization just shy of 80 percent, a record high since Genscape began monitoring the hub in 2009. Genscape has never observed capacity utilization higher than 80 percent based on historical data, though utilization may breach 80 percent depending on the utilization of merchant capacity, or capacity that is leased by an owner to other users.

Utilization of operational capacity has remained above 70 percent at Cushing since November 2015. Storage capacity at six of 16 operators at Cushing was utilized above 80 percent as of May 3, 2016.

There is little help on the horizon from new storage capacity to prevent Cushing from hitting maximum operating capacity. There are two tanks under construction at Cushing, totaling 540,000 bbls. No tank construction projects are underway at Patoka.

The record high May 3, 2016 was almost 600,000 bbls higher than the previous record high set March 15, 2016 and 5.0mn bbls more than the highest point reached in 2015.

Storage data reflecting Cushing and Patoka inventories for week ending May 5, 2016 was released to customers on May 9. The May 3, 2016 Cushing record high was the fifteenth this year, as stocks continue to grow.

Patoka stocks also reached a record high after increasing two consecutive weeks, up 2.2mn bbls between April 15 and April 29, 2016. The record high was 488,000 bbls higher than the previous record high of 10.6mn bbls reached November 13, 2015.

Capacity utilization at Patoka terminals was at 65 percent for the week of April 29, 2016, just below the record high utilization rate of 67 percent set April 2013. Capacity utilization at Patoka has fallen below 50 percent once in 2016.

In 2016, crude storage in Texas increased as storage capacity in the Midcontinent became scarce. Total monitored crude stocks in the Gulf Coast and West Texas region increased 18.5mn bbls between February 12 and March 18, 2016 to a record high above 122mn bbls. Stocks in the region remained just below the record high for the next month before dropping 2.4mn bbls the week ending April 29, 2016, coinciding with higher waterborne loadings out of the Gulf Coast.

Record-high exports ship from USGC

More than 4.5mn bbls of waterborne shipments left the Gulf Coast for foreign destinations the week ending April 29, 2016, the most since Genscape began monitoring in August 2014. On a weekly basis, crude exports from the Gulf Coast averaged about 888,000 bbls higher in March and April compared to January and February 2016.

Total U.S. Gulf Coast waterborne loadings reached a 2016 high of 7.5mn bbls week ending April 29, 2016, and have also increased since March 2016. Weekly loadings in March and April averaged 1.3mn bbls higher than in January and February 2016.

During the week ending April 29, 2016, two export shipments left from St. James: one to Brazil and one to the Canadian East Coast, totaling 1.4mn bbls. In addition, more than 1.0mn bbls moved from Beaumont-Nederland, TX, to Caribbean locations. Total shipments from there increased to 1.9mn bbls. In Corpus Christi, TX, an export loaded from the Valero West refinery dock, expected to bring about 441,000 bbls to Pembroke, U.K. Total domestic loadings from Corpus Christi fell 501,000 bbls.

Total loadings also decreased from Houston, falling 630,000 bbls to 1.17mn bbls, which offset a 654,000-bbl increase from the previous week. A 550,000-bbl loading left Enterprise’s Houston Terminal for Bullen Bay, Curacao, on April 28, 2016, and 500,000 bbls loaded the next day from HFOTCO for Gibralter, U.K.

Waterborne loadings out of the Gulf Coast reach 2016 high for week ending April 29

Midcontinent refinery utilization dips during seasonal maintenance

Refineries typically use the spring months to perform necessary repairs and maintenance on infrastructure before gearing back up for summer driving season. Units at several major refineries in the Midcontinent shut beginning in late February 2016. Primary processing utilization rates decreased 15 percent from the end of February to a 2016 low of 82 percent reached April 8, 2016.

The Midcontinent refinery maintenance season is coming to a close as several units return to service. Primary processing utilization rates were back to 93 percent week ending April 29, 2016. Record-high storage levels could decline if run rates continue to increase.

A 204,000 bpd crude distillation unit was brought back online at Marathon’s 206,000 bpd Robinson, IL, refinery April 28, 2016, after being offline since March 2, 2016. Activity at all monitored units at Husky’s 155,000 bpd Lima refinery has increased since April 27, 2016, after being shut since mid-March for a planned turnaround.

Although maintenance is being completed at several refineries, further outages are expected elsewhere. BP and Husky’s 160,000 bpd Toledo, OH, refinery recently started shutting units in preparation for 11 weeks of planned maintenance. The turnaround will reduce operating capacity at the facility by 75 percent.

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