Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Oil | Shipping

Analysis: US crude exports hit new high; more Permian crude expected in Gulf

Oil | Crude Oil | Refined Products

Will Citgo’s US refineries be seized by creditors?

Oil

Platts Market Data – Oil

Oil | Crude Oil | Refined Products | Equities | Financial Services | Private Markets

North American Crude Oil Exports Summit, 2nd Annual

Agriculture

US biofuel makers say EPA deal does not fully account for refinery waivers

Analysis: US crude exports hit new high; more Permian crude expected in Gulf

Highlights

Permian-USGC crude line capacity increasing

EPIC pipeline due to start in July

Permian output to hit 5 million b/d by 1Q 2020

Houston — US crude oil exports are expected to remain high moving forward as a new wave of Permian Basin crude oil hits the Gulf Coast in coming months.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

Crude exports out of the US hit an all-time high of 3.77 million b/d in the week ended June 21, according to data released Wednesday from the Energy Information Administration, breaking the previous record high of 3.607 million b/d set during the week ended on February 15.

The latest record week was an increase of 350,000 b/d to the week ended June 14, which saw 3.422 million b/d exported, according to the EIA. Furthermore, last week marked the fifth consecutive week in a row at US crude exports exceeded 3 million b/d, which could become a new normal for export volumes.

The jump in exports and its rather steady level at or above 3 million b/d comes at a time when multiple pipeline projects are underway to bring more crude directly from the Permian to the Gulf Coast.

A collection of three new crude pipelines, including the EPIC interim crude line, are expected to start up between now and the end of the year. Together, the lines will have capacity to move an additional 2 million b/d of crude from the Permian Basin to the Gulf Coast.

Linefill on the 400,000 b/d EPIC line was expected to begin in late June, with anticipated startup in July. EPIC will move crude from the Permian Basin to Corpus, Christi, Texas.

Plains All American's 670,000 b/d Cactus 2 pipeline also will move crude from the Permian to Corpus Christi and is expected to be operational in the third quarter.

Phillips 66's Gray Oak, with connections to Corpus Christi, Sweeny and Houston is set to start in October, according to sources.

As Gulf Coast refinery demand for light sweet crude is at its maximum level, many of the additional barrels reaching the region will be exported, but in order to exported, the prices on the Gulf Coast must be appealing to international buyers.

"More pipelines coming on means more supply gets to the Gulf Coast with nowhere to go," a broker said.

Pipelines out of the Permian currently carry more than 4 million b/d of crude to market, which is right around current Permian production of 4.1 million b/d. S&P Global Platts Analytics forecasts Permian production to reach roughly 5 million b/d by the first quarter 2020. With additional pipes coming online, however, there will be sufficient takeaway capacity in the Permian through 2020.

As more crude reaches the Gulf Coast there will be a growing need to increase storage and export infrastructure. Currently, 22 facilities across three Gulf Coast states have the ability to export nearly 6 million b/d, according the Platts data. And there are more projects in the works to meet growing demand. By 2021, Gulf Coast export capacity could reach over 10 million b/d.

PRICING FOR EXPORTS

For US crude barrels to find buyers on the international market, they must remain competitive and reactive to changes in arbitrages. This is exactly how values for US crude on the Gulf Coast have responded.

Despite large crude stock draws and increased refinery inputs and utilization in the USGC reported last week, which might typically be bullish for oil prices as it points to a decrease in supply, differentials for Gulf Coast grades have remained rather weak.

August barrels of West Texas Intermediate at the Magellan East Houston terminal were heard to trade Wednesday morning at their lowest level since October 23, at a $4.25/b premium to cash WTI. That is a dramatic decline in values. The 30-day rolling average for front-month MEH has been about $6.88/b.

According to market participants, values for crudes along the Gulf Coast, including WTI MEH, are greatly influenced by the change in the Brent/WTI spread. As the spread narrows, it is indicative of US exports becoming less competitive on the international market in comparison to their Brent-based competitors.

Over the last 30 trading days, the swap spread has average $7.86/b, according to data collected by S&P Global Platts. On Tuesday, the swap spread was $6.38/b.

But softer differentials have helped to keep the arbitrage open for crude exports. According to Platts Analytics data, the MEH and Eagle Ford arbitrages to both Northwest Europe and Singapore are currently open.

USGC CRUDE STOCKS TIGHTEN

Strong exports combined with high crude runs have reduced USGC crude inventories.

In the week ended June 21, PADD 3 stocks saw a 6.26 million-barrel draw, according to weekly data from the EIA. Moreover, in the week ending on June 14, PADD 3 stocks saw a 5.83 million-barrel draw, bringing the total draw over the past two weeks to over 12 million barrels, EIA data showed.

Net inputs into PADD 3 refineries increased by 280,000 b/d in the week ending on June 21 to just under 9.3 million b/d, according to EIA data. This increase in net inputs brought PADD 3 refinery utilization up 2.4% to 96.1%, the highest level since early January, EIA data showed.

--Kristian Paris Tialios, kristian.tialios@spglobal.com

--Laura Huchzermeyer, laura.huchzermeyer@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com