USGC sour crude margins ease as imports resume following Harvey: In the LOOP

US Gulf Coast refining margins for medium and heavy sour crude oil grades have fallen back to levels more closely resembling pre-Harvey values in the month since the storm's departure.

After Hurricane Harvey made landfall on August 25, refining margins soared on limited supply as port restrictions limited sour crude imports into the US Gulf Coast.

In addition, several pipeline closures further tightened supply available to Louisiana refiners, the majority of which were unaffected by the storm. As these refiners ramped up run rates to make up for a loss of product from offline Texas refineries, they bid up the price of several regional and imported sour grades.

By the end of September, however, margins had dropped back below end-August levels.

The fall in regional refining margins for sour crude grades coincided with an increase in Gulf Coast crude imports as port restrictions eased and infrastructure came back online. In September, the Louisiana Offshore Oil Port imported 10.73 million barrels of crude, representing a month-on-month increase of 3.04 million barrels, according to data from Platts Analytics and US Customs.

Regional sour benchmark Mars saw its regional cracking netback margin soar $10.26/b from its August 24 pre-Harvey level to end August at $21.17. The grade's regional coking netback margin increased $13.93/b during this same time period to end August at $26.38/b. By the end of September, however, these levels had fallen back, with the cracking netback value for Mars moving to $8.64/b. The grade's coking netback value decreased to $11.23/b by the end of the month.

S&P Global Platts margin data reflects the difference between a crude's netback and its spot price. Netbacks are based on crude yields, which are calculated by applying Platts produce price assessments to yield formulas designed by Turner, Mason & Co.

Mexican Maya crude also saw its regional cracking netback margin fall from $12.28/b at the end of August to $3.93/b by the end of September to converge with pre-Harvey levels. The grade's regional coking netback margin fell $12.11/b from the end of August to close September at $12.11/b. These values closely resemble pre-Harvey margins of $5.62/b for cracking and $12.20/b for coking.

Month-on-month Saudi Arabian Arab Light crude saw its regional cracking netback margin fall $12.98/b to end September at $7.27/b. The grade's regional coking netback margin decreased $15/b to $9.43/b at the end of September. These levels compare to the grade's pre-Harvey levels of $9.62/b for cracking and $11.57/b for coking.

The story was the same with Iraqi Basrah Light, which had a regional cracking netback margin of $10.20/b at the end of September, down from $20.32/b at the end of August but up from its pre-Harvey level of $9.75/b. The grade's coking netback margin fell $11.88/b month on month to end September at $12.08/b, up slightly from its pre-Harvey level of $11.25/b.

The 'In the LOOP' Americas crude oil wrap runs each Monday in Crude Oil Marketwire, North American Crude and Products Scan and on the Platts Global Alert. You can read the FAQ: USGC LOOP Sour crude here and find the full special report LOOP Sour Crude: A benchmark for the future here.