U.S. crude inventories monitored by Genscape in Texas, Louisiana, and Cushing, OK, increased during the week ending May 13, 2016, bucking market expectations that stocks would fall following recent oil sands production disruptions. Meanwhile, Canadian crude barrels were taken from storage to compensate for lower output.
Cushing stocks reached a record high during the week ending May 13, 2016 of near 71mn bbls. Between May 3 and May 13, 2016, inventories there rose 708,000 bbls, pushing utilization above 80 percent for the first time since Genscape began monitoring the hub in 2009. During the week ending May 13, 2016, total inventories in Houston, Beaumont-Nederland, TX, and Corpus Christi, TX, rose 2.466mn bbls to a record high of more than 83mn bbls.
Flow from Cushing to the Texas Gulf Coast increased 129,000 bpd to 1.076mn bpd during the week ending May 13, 2016, contributing to the storage build there. Pipeline utilization between the two markets increased eight percent to 69 percent, the highest utilization since week ending March 4, 2016.
During the week ending May 13, 2016, total Genscape-monitored stocks in Texas and Louisiana were 93,000 bbls less than the record high reached March 18, 2016. Record-high stock levels at U.S. Gulf Coast and West Texas locations were reached several times in 2016 following Cushing highs throughout the year. Weekly Cushing stocks have hit record highs 17 times this year as more crude moved into storage due to a global crude glut and a contango price environment.
Total U.S. crude stocks increased 1.31mn bbls to 541.294mn bbls for week ending May 13, 2016, according to the U.S. Energy Information Administration on May 18, 2016. However, market analysts polled by Reuters expected U.S. crude stocks to decrease about 3.4mn bbls compared to the previous week, the news agency said on May 17, 2016.
Canadian stocks fall with production output
Some of the crude stored in the U.S. during the week ending May 13, 2016 was likely from Canada. During the week ending May 13, 2016, Western Canadian stocks fell 1.223mn bbls to below 25mn bbls, according to Genscape. The previous week, Western Canadian inventories declined 951,000 bbls, when a massive wildfire began in northern Alberta. Genscape monitors storage locations including Alberta Heartland, Hardisty, and Edmonton in the province, as well as storage levels at Kerrobert, SK.
Total U.S. imports from Canada fell 366,000 bpd to 2.587mn bpd for the week ending May 13, 2016 compared to the previous week. Canadian imports have averaged 3.130mn bpd in 2016, according to EIA data.
A good deal of Canadian crude that enters the U.S. moves on TransCanada’s 590,000 bpd Keystone pipeline, which originates in Hardisty, AB, and terminates in Cushing via Steele City, NE. From Steele City, the pipeline runs to both Cushing and Patoka, IL. Canadian crude pipeline flow to Cushing on Keystone increased 12,000 bpd to 218,000 bpd the week ending May 13, 2016, while volumes to Patoka on the pipeline were 9,000 bpd below the week before.
Crude flow into the U.S. Midcontinent also increased during the week ending May 13, 2016 on the Marathon-operated 1.2mn bpd Capline Pipeline, which runs from St. James, LA,-to-Memphis, TN, or Patoka. During that week, volumes increased 43,000 bpd to 343,000 bpd compared to the previous week. Capline’s volumes are expected to increase to as much as 600,000 bpd in May 2016 due to higher shipper demand following the production outages in Canada, according to Reuters, citing sources familiar with the matter. Between May 14 and May 19, 2016, the pipeline’s volumes averaged 317,000 bpd. Flow was shut for 17 hours on May 17, 2016.
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