Monday, February 29, 2016

Cushing, OK, Storage Domino Effect Sends USGC Stocks Higher

Hillary Stevenson and Dylan White, Oil Analysts

U.S. Gulf Coast storage inventories have increased nearly 7mn bbls so far in 2016, and could continue to build as market participants seek storage there as an alternative to Cushing, OK, where stocks are near maximum capacity.

As of February 19, 2016, Gulf Coast stocks, including those in Houston, Beaumont-Nederland, TX, and Corpus Christi, TX, reached near 75mn bbls, only 739,000 bbls shy of the record high level reached in October 2015. On January 5, 2016, Cushing inventories surpassed a previous record high level by 125,000 bbls.

Due to extensive storage expansion, capacity utilization at Gulf Coast storage locations was lower the week ending February 19, 2016 at 58 percent compared with capacity utilization during the October 2015 high. At that time utilization was 62 percent. The inventory peak in October 2015 also followed a record-high at Cushing.

The 2015 stock high at Cushing, set April 14, was followed by inventory builds in the Gulf Coast and West Texas region. Of the Gulf Coast-monitored storage locations, stocks at Beaumont-Nederland were the first to hit a record high the week ending September 25, 2015, and other terminals followed.
Beaumont-Nederland inventories were also the first to hit record levels after Cushing inventories surpassed the previous high on January 5, 2016. Similar builds are likely to occur in other Gulf Coast storage locations, as they did in late 2015.

US Storage Record Highs by Location
U.S. Storage Record Highs by Location. Click to enlarge
Lower waterborne crude loadings have also contributed to the recent increase in Gulf Coast stocks. As of February 19, 2016, Gulf Coast domestic waterborne loading volumes were 34 percent lower than the beginning of the year and 36 percent lower than 2015 average loading volumes. Additionally, less loadings have left the Gulf Coast. As of February 19, 2016, 80 percent of loadings were destined for other Gulf Coast ports, compared to 42 percent for the week ending January 1, 2016.

Since the crude export ban was lifted in December 2015, a handful of waterborne shipments have shipped from the Gulf Coast for destinations in Europe. However, these shipments are being displaced from preexisting destinations, such as refinery markets in eastern Canada. Therefore, total outgoing waterborne volumes from the Gulf Coast has not significantly increased since the ban was lifted.

Genscape's U.S. Gulf Coast Crude Storage Report delivers critical storage-level information for crude oil stocks at the most significant port cities in PADD 3: Houston, Nederland, and Corpus Christi a full day ahead of EIA estimates. Click here to request a free trial of the U.S. Gulf Coast Crude Storage Report.

Additionally, Genscape's Cushing Crude Oil Storage Report offers insight into the largest concentration of above-ground storage on earth two days ahead of the EIA and provides much more granular information to assess oil storage by owner or purpose. To learn more or request a free trial of the Cushing Crude Oil Storage Report, click here.

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