MARKET WATCH: NYMEX crude prices rise on Seaway pipeline expansion news

Crude oil futures prices rose on the New York market Mar. 18 after Enterprise Products Partners LP told analysts and investors that an expanded Seaway pipeline was likely to be in service by early June, which is earlier than previously expected.

An existing 30-in. pipeline extends from Cushing to the Gulf Coast. EPP is building a parallel pipeline to expand Seaway’s capacity to 850,000 b/d from 400,000 b/d.

The additional pipeline capacity will help reduce oil storage volumes faster at Cushing. US oil production has increased more rapidly than has the availability of pipelines to transport crude to refineries.

Separately, TransCanada Corp. started commercial service on Jan. 22 to transport crude oil from Cushing to the Gulf Coast. That pipeline section is expected to move an average 520,000 b/d during 2014.

The US Energy Information Administration said Mar. 19 that commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 5.9 million bbl for the week ended Mar. 14 compared with the previous week.

At 375.9 million bbl, US crude oil inventories are in the upper half of the average range for this time of year, EIA said in its weekly petroleum report. The gain marked the ninth consecutive rise. The jump was larger than expected. Analysts polled by the Wall Street Journal had expected a rise of 2.3 million bbl.

Separately, the American Petroleum Institute said its own inventory showed crude oil supplies increased by 5.9 million bbl for the week ended Mar. 14.

Gasoline inventories drop

Total motor gasoline inventories decreased by 1.5 million bbl for the week ended Mar. 14, which EIA said was near the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week.

Distillate fuel inventories decreased by 3.1 million bbl. Propane-propylene inventories grew 200,000 bbl last week and are near the lower limit of the average range.

Refinery inputs averaged 15 million b/d during the week ended Mar. 14, which was the same as the previous week’s average, EIA said. Refineries operated at 85.6% of capacity last week.

Gasoline production decreased last week, averaging nearly 9.2 million b/d, EIA said. Distillate fuel production increased last week, averaging over 4.7 million b/d.

Crude oil imports averaged over 7.3 million b/d last week, down by 2,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged 7.2 million b/d, which EIA said was 4.5% below the same 4-week period last year.

Total motor gasoline imports, including finished gasoline and gasoline blending components, averaged 421,000 b/d for the week ended Mar 14 while distillate fuel imports averaged 265,000 b/d.

Energy prices

The New York Mercantile Exchange April crude contract gained $1.62 on Mar. 18, closing at $99.70/bbl. The May contract rose $1.26 to settle at $98.88/bbl.

The April natural gas contract declined 8¢ to a rounded $4.56/MMbtu. On the US spot market, the gas price at Henry Hub was $4.48/MMbtu, down 10.7¢.

Heating oil for April delivery rose 2.47¢ to a rounded $2.91/gal. Reformulated gasoline stock for oxygenate blending for April delivery climbed 2.17¢ to a rounded $2.90/gal.

In London, the May ICE contract for Brent crude delivery increased 55¢, closing at $106.79/bbl. The June contract also climbed 55¢ to $106.54/bbl. The ICE gas oil contract for April gained $2 to $891.50/tonne.

The Organization of Petroleum Exporting Countries reported its basket of 12 benchmark crudes declined 56¢ to $103.29/bbl on Mar. 18.

Contact Paula Dittrick at paulad@ogjonline.com.

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