RECORD LEVEL OIL
Crude oil inventories on the US Gulf Coast reached a record high of 207.2 million bbl on Apr. 11, as a result of the continuing strong crude oil production growth, the opening of TransCanada's Marketlink Pipeline, and a drop in crude oil inputs at Gulf Coast refineries due to seasonal maintenance, according to the US Energy Information Administration.
"While [Gulf Coast] crude oil inventories typically build during the beginning of the year, this year's increase has been particularly notable," EIA said.
Gulf Coast inventories have increased 46.2 million bbl from 161 million bbl on Jan. 10 to the current level, which is 24.2 million bbl above the previous year-average and 22.2 million bbl above year-ago levels. Typically over this period, Gulf Coast crude oil inventories build only 23.4 million bbl.
The start-up of TransCanada's 700,000-b/d Marketlink Pipeline, which runs from the Cushing, Okla., storage hub to Houston, has been the main driver of the elevated Gulf Coast inventory levels and recent corresponding draws at Cushing. In late January, TransCanada completed the first delivery of crude oil via Marketlink to Gulf Coast refineries. Trade press has reported that crude oil deliveries via Marketlink are expected to average 525,000 b/d in 2014.
A seasonal drop in crude oil inputs due to maintenance at Gulf Coast refineries resulted in lower demand for crude oil in the past 2 months. Crude inputs at Gulf Coast refineries have fallen from 8.3 million b/d on average for the 4 weeks ending Jan. 17 to 7.7 million b/d for the 4 weeks ending Mar. 21. During the same period, crude oil imports actually increased slightly.
Rising in-region production on the Gulf Coast have kept inventories levels generally high in recent years. "In the 106 weeks since March 2012, [Gulf Coast] inventories have been above the previous 5-year average in all but seven of those weeks. That coincides with a period during which crude oil production growth in the [Gulf Coast] has averaged about 584,000 b/d," EIA said.
Likewise, crude oil production growth in the Midwest has averaged 278,000 b/d from March 2012 to January 2014. With more production on the Gulf Coast and transportation of Midwest crude to the region, more storage capacity has been required to meet these logistical challenges, EIA said.
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