During the week ending October 11, total inventories at Cushing, OK, slid to below 63 million barrels, marking the largest weekly decline in a seven-day period since September 2009, according to Genscape. Stocks hit a 10-month low between October 4 and October 11 at the hub, as inbound and outbound crude pipeline flow volumes supported an inventory decline.
On October 11, more than 80 percent of Canadian-to-United States pipeline capacity was shut after climate activists disrupted movements on a number of pipelines. TransCanada’s 590,000 bpd Keystone Pipeline, which originates in Hardisty, Alberta, was shut on October 11 for about eight hours. Genscape data showed on October 6, volumes on the pipe declined to below 100,000 bpd during a planned outage.
In addition, crude flows on the 450,000 bpd Wichita Falls, Texas,-to-Oklahoma segment of Plains All American’s Basin pipeline fell to below 150,000 bpd on October 5 through October 8. According to Reuters, Basin was undergoing hydrotesting during this time period.
While Cushing inflow fell, outflow rose, and increased volumes were monitored on TransCanada’s 700,000 bpd Gulf Coast pipeline and BP’s 180,000 bpd BP1 pipeline, which serves BP’s 405,000 bpd Whiting, Indiana, refinery.
Flows on the Gulf Coast pipeline increased about 29 percent during the week ending October 11 to reach a nine-month high. Higher volumes were likely used to supplant lower Basin pipe flows from the West Texas Permian Basin to the Gulf Coast. TransCanada's Gulf Coast pipeline delivers to Nederland, Texas, or Houston.
BP1 flows more than doubled during the week ending October 11. The Whiting refinery has been undergoing planned maintenance since September 19, which may be altering the crude slate and sourcing processes.
The large Cushing draw during the week ending October 11 followed a sustained period of low volatility in inventories at the NYMEX Light Sweet Crude delivery point, where stocks hovered between 65 million barrels and 68 million barrels since June 2016.
During fall 2015, a similar destocking pattern occurred at Cushing, where inventories fell five million barrels between August 21, 2015 and October 30, 2015. Stocks rebounded to reach a record high of 70.9 million barrels on May 13, 2016.
Prior to the stock decline week ending October 11, the largest weekly Cushing draw this year was for week ending April 8, when Cushing inventories fell about 1.5 million barrels due to an eight-day outage on the Keystone pipeline caused by a leak. West Texas Intermediate crude front month prices gained $0.64/bbl on April 11, when the week ending April 8 data point was published by Genscape. WTI gained $0.44/bbl on October 13, when the October 11 draw was published, according to the NYMEX light sweet crude contract.
Cushing stocks are expected to increase toward the end of the year as barrels remain in Oklahoma to avoid ad valorem taxation in Texas.
Genscape's Cushing Crude Oil Storage data is collected using infrared cameras, aerial diagnostics, and other proprietary measurement techniques. This approach translates into highly accurate, advance notice of the actual oil storage levels at Cushing. To learn more or request a free trial of Genscape's Cushing Crude Oil Storage Report, please click here.
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