U.S. Gulf Coast crude oil imports from Canada reach record-high volumes (2/27/2019)

The volume of crude oil imports to the U.S. Gulf Coast (Petroleum Administration for Defense District, or PADD, 3) from Canada has increased significantly during the past several years, reaching a record high of 644,000 barrels per day (b/d) in October 2018. Canada’s exports tend to be heavy crude oils, which Gulf Coast refiners are well equipped to process. Increasing volumes of Canadian crude oil have been transported to PADD 3 via rail (a more expensive option than via pipeline) because the existing pipelines have largely reached their capacities. This capacity limitation has created a transportation constraint and contributed to large price differentials between Western Canadian Select (WCS) and West Texas Intermediate (WTI) crude oils. The future levels of crude-by-rail shipments from Canada to the United States and price differentials between WCS and WTI are uncertain, as trade press reports indicate that increased shipping capacity in both rail and pipelines are expected by the end of 2019. ... More »

Permian and Gulf of Mexico regions expected to drive continued record-high U.S. crude oil production through 2020 (2/21/2019)

The U.S. Energy Information Administration’s (EIA) February 2019 update of its Short-Term Energy Outlook (STEO) forecasts that U.S. crude oil production will average 12.4 million barrels per day (b/d) in 2019 and 13.2 million b/d in 2020. If realized, both of these forecast levels would surpass the record high of 11.0 million b/d set in 2018, keeping the United States as the world’s largest producer of crude oil. Overall U.S. crude oil production increases are largely the result of continued production growth in the tight-oil formations in the Permian region, as well as the expectation for 19 new projects to start in 2019 and 2020 in the Federal Offshore Gulf of Mexico (GOM) (Figure 1). ... More »

Low gasoline crack spreads and high crude oil feedstock costs reduce U.S. Gulf Coast refinery margins (2/13/2019)

The U.S. Energy Information Administration (EIA) estimates that margins for U.S. Gulf Coast refiners have declined to the lowest levels since late 2014, based on recent price trends in certain grades of crude oil and petroleum products. Although EIA estimates U.S. refiners will be able to find alternative sources of crude oil supply, recent crude oil supply reductions from members of the Organization of the Petroleum Exporting Countries (OPEC) and Canada along with threat of production disruptions in Venezuela have disproportionately reduced the availability of medium and heavy grades of crude oil with high sulfur content and increased the prices of these oils relative to other grades. In addition, gasoline crack spreads have been mostly negative since November 2018 and are further contributing to low refiner margins. Despite the low gasoline margins, refinery runs remain relatively high because of strong distillate prices. ... More »

Venezuelan sanctions unlikely to have a significant impact on U.S. refiners (2/6/2019)

U.S. imports of Venezuelan crude oil have decreased in recent years as production in Venezuela declined (Figure 1). Recently announced U.S. sanctions directed at Venezuela’s energy sector and state oil company, Petróleos de Venezuela, S.A. (PDVSA), will essentially eliminate U.S. imports of Venezuelan crude oil as the full effects of the sanctions emerge. However, the U.S. Energy Information Administration (EIA) does not anticipate any significant decrease in U.S. refinery runs as a result of these sanctions. U.S. imports of Venezuelan crude oil have been falling for several years and refineries have been replacing Venezuelan crude oil with other heavy crude oils. Moving forward, refineries may also choose to run lighter crude oils because transportation constraints may limit the availability of heavy crude oils. Refiners with significant asphalt and road oils processing unit capacity, for which Venezuelan crude oil is well suited, may have a harder time finding adequate replacements; however, these refineries have also limited imports from Venezuela recently. ... More »