Record-high US crude oil exports last month caused a sharp drawdown in crude storage at the only port capable of loading and off-loading supertankers.
Crude inventories at the Louisiana Offshore Oil Port (LOOP) plummeted in June, falling from 83% of capacity the week of May 30 to 36% of capacity the week of July 11, according to Ursa measurements.
The demand for barrels outpaced the supply arriving at the complex, pulling barrels out of storage.
The amount of crude loading at LOOP averaged a record-high 324,330 barrels per day in June, up from 136,450 bpd in May, according to ClipperData.
While exports from LOOP jumped in June, the same month saw a sharp decline in imports.
Imports discharged at LOOP last month dropped to 66,000 bpd, down by more than half from May’s volume, and the lowest on record going back to late 2009.
Inventory data: Ursa
A large premium for ICE Brent crude futures over WTI futures encouraged US exports.
The Brent/WTI spread reached $10.98/barrel on May 27, the widest differential in almost a year.
With US exports exploding in June, the Brent/WTI spread narrowed to $5.92/b July 1, though since then it has been widening. On July 18, the spread was almost $7/b.
The trend of rising US exports has been in place ever since legal restrictions were lifted in late 2015.
US shale production growth has meant increasing volumes of supply available for refiners abroad.
Last month also saw (yet) another all-time high set for weekly US crude exports, according to US Energy Information Administration (EIA) data.
Source: US Energy Information Administration (EIA)
LOOP was ideally positioned to take advantage of the export boom, as the facility was designed decades ago to offload giant tankers.
Some modifications were necessary to enable loadings. Once complete, in February 2018, LOOP became the only US facility capable of fully loading a VLCC tanker without making ship-to-ship transfers.
In an earlier blog, we discussed the physical layout of LOOP — which includes Clovelly Hub storage facility 23 miles inland connected by pipeline with the marine terminal 18 miles offshore in the Gulf of Mexico.
We also noted the volatility that VLCCs carrying ~2 million barrels a tanker had on LOOP storage levels.
Clovelly Hub facility
Image: Google, Landsat/Copernicus
One thing that was different about June exports was the type of crude loaded.
LOOP exported a record amount of light, sweet crude, according to Reuters. Six tankers holding 8.5 million barrels (283kbpd) departed from LOOP, the article said, citing ClipperData and Refinitiv Eikon.
Most supply leaving LOOP consists of medium-sour crude produced in the Gulf of Mexico.
Of course, competition is heating up. A number of projects are underway to build deepwater ports along the Gulf Coast.
We’re monitoring several pipelines from the Permian Basin to the Gulf Coast. We’re also watching the progress of the EPIC Pipeline export terminal and the Moda Ingleside Energy Center.
Let us know if you have any questions. Contact us at sales@ursaspace.com
