Ex-cavern LOOP Sour deliveries hit nearly 1 million barrels in September

LOOP Sour ex-cavern deliveries in September were just shy of 1 million barrels, and it appears companies are more interested in refining the crude blend rather than storing it given the backwardated market, according to LOOP data published Monday.

The Louisiana crude terminal allocates one of its eight underground caverns to the crude blend LOOP Sour. Ex-cavern deliveries in September were more than 990,000 barrels, or 33,000 b/d, LOOP said. That is down slightly from 38,000 b/d in August and is 10,000 b/d less than the 2018 to-date average.

LOOP Sour was slightly lighter in September and its most sweet in more than two years. LOOP Sour had an average API of 29.7 in September, while its sulfur content fell to 2.11%, the lowest level since deliveries averaged 2.01% in March 2016.

LOOP Sour is comprised of the US Gulf of Mexico grades Mars and Poseidon and a crude blend called Segregation 17, into which the Middle Eastern grades Arab Medium, Basrah Light and Kuwait Export Crude can be delivered. LOOP Sour has averaged 29.50-30.50 API and 2.11%-2.90% over the past 12 months.

That makes it most similar to Mars in API gravity and Arab Medium from a sulfur standpoint. That is notable considering there have been no waterborne Arab Medium imports at LOOP since July 2017. In July-September, Kuwait totaled 375,000 barrels at LOOP, compared with 13.1 million barrels of Basrah Light.

It is worth noting that not all LOOP Sour-deliverable crudes will be delivered into the LOOP Sour cavern.

LOOP auctions on a monthly basis the ability to store LOOP Sour through capacity allocation contracts, or CACs. Each CAC gives the owner the right but not the obligation to store 1,000 barrels. (The next auction will be Tuesday, October 2.)

While CAC purchasing appears stable, CAC utilization rates have fallen as the crude market remains backwardated, meaning market participants find it more economic to refine LOOP Sour rather than leave it in cavern. The September LOOP Sour CAC utilization rate was 13%, the lowest since LOOP began publishing the data in May 2017. CAC utilization rates have fallen four of the past five months.