U.S. Gulf Coast and Midwest refiners were forced to sharply cut their crude runs owing to refinery and pipeline issues during the week ended April 8, an analysis of U.S. Energy Information Administration (EIA) data showed Wednesday.
Total U.S. crude oil inventories rose by 6.634 million barrels to 536.531 million barrels, a significantly larger build than the 1 million barrels expected by analysts surveyed by Platts earlier in the week.
In the Midwest, where refinery utilization fell by 5.3% to 82.4%, refineries reduced their crude runs after TransCanada shut its 550,000 barrels per day (b/d) Keystone pipeline -- which carries heavy Canadian crude from Hardisty, Alberta, to Patoka, Illinois -- after discovering an oil leak on April 2.
While TransCanada restarted the pipeline over the weekend, the pipeline outage still appeared to be weighing on refinery throughput in the region. The 336,000 b/d Wood River refinery in Roxana, Illinois -- a joint venture between Phillips 66 and Cenovus -- experienced an upset on Tuesday after attempting to restart a unit following the Keystone restart.
While the pipeline outage led refiners to cut throughput, crude stocks in the region drew by 1.988 million barrels as crude was taken out of storage to account for the reduction in imports.
Stocks at Cushing, Oklahoma -- delivery point for the New York Mercantile Exchange (NYMEX) crude futures contract -- fell 1.767 million barrels to 64.55 million barrels.
While Cushing stocks are still relatively oversupplied, this too has fallen. With last week's drop, Cushing inventories fell to just 5% above the five-year average of EIA data, down from over 10% the week prior and from over 30% in late-February.
The prompt NYMEX crude contango -- trading around $1.28/b during midday New York trading Wednesday -- has narrowed sharply over this period, having widened as far as $2.62/b on February 11.
This is reflected even more starkly in longer-dated time spreads such as the prompt-month/12th-month contango, which was trading around $4.40/b Wednesday, in from nearly $12/b in mid-February.Meanwhile, Midwest imports fell 686,000 b/d to 1.881 million b/d, while total U.S. imports from Canada fell 586,000 b/d to 2.581 million b/d -- roughly equal to the capacity of the Keystone pipeline.
GULF COAST COKERS TAKE HIT
On the U.S. Gulf Coast, refinery utilization fell 1.9 % to 93.2% after a coker at LyondellBasell's 268,000 b/d Houston refinery caught fire Friday. The refinery was forced to cut runs by roughly 30%, amounting to 2% of regional coking capacity.
Earlier in the week, Citgo shut a 44,900 b/d delayed coker at the West Plant of its 157,500 b/d Corpus Christi, Texas, refinery. A Citgo spokesman gave no timeline for repairs Wednesday.
Gulf Coast crude stocks added 6.992 million barrels on the sharp reduction in run rates.
A sharp rebound in U.S. crude oil imports from Iraq made up for the reduction in imports from Canada, as U.S. imports rose 692,000 b/d to 7.94 million b/d. Total imports were just 86,000 b/d above the year-to-date average.
Imports from Iraq jumped to 634,000 b/d after dwindling to 59,000 b/d the week prior. Imports from Iraq averaged 213,800 b/d in 2015 and have averaged 277,600 b/d thus far in 2016, and were last higher in the week ended August 29, 2014.
The rise in total imports would have been significantly higher if not for the Keystone outage, as a tight West Texas Intermediate (WTI)-Brent spread has encouraged imports of Brent-linked crude into the United States.
Front-month WTI futures averaged a discount of 66 cents/b in March and have averaged a discount of 84 cents thus far in April, according to Intercontinental Exchange. In February, the discount was wider, averaging 1.47/b.
Additionally, some analysts previously cited reduced imports on weather delays in the Houston Ship Channel, which may have landed on the U.S. Gulf Coast during this reporting week.http://www.oilvoice.com/n/Platts-Analysis-of-US-Energy-Information-Administration-EIA-Data-Refinery-Pipeline-Outages-hit-US-Refinery-Runs/76c6c021c605.aspx