Sunday , January 24 2021

Feature: US refineries ready for strong Q4 after record crude oil processing in Q3

Houston –
The US processing complex processed more crude oil in the third quarter of 2018 than any other third quarter in the record market – trend refineries attributed to cheaper crude streams in North America, primarily from Infrastructure Limited Perm's Basin and West Canada. While these two oil patches have quite a variety of infrastructure, in the long run, sources say they expect rough cuts in these areas in the fourth quarter, leaving US refineries firmly for another quarter of a quarter.

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"Oil refineries Q4 will vary by region, and those in the Gulf Coast and the Middle West with access to cheap crude or will be strengthened or remain at current levels." East Coasts that buy LLS and Brent are unlikely, "one gas stationman said.

Another petrol retailer said he expects another record quarter in the fourth quarter, or at least the refinery continues to be above the historical norms.

Data from US energy information showed from July to September, with US gross refinery analysis averaging 17,746 million b / d, which is the highest rate in the third quarter of data in the 1990s.

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This trend may seem confusing for price-oriented consumers in Cushing, Oklahoma – the US's most important oil hub – where S & P Global Platts data show that WTI's oil price a month ago was estimated at $ 69.63 in the third quarter, more than 45% above average Q3 2017.

But closer to the North American crude oil market, the picture is more complex: although Q3 WTI in Cushing has rallied more than a year, crude oil in western Canada and the Texan basin of Perm were traded with significant discounts on US and international oil benchmarks. That is why "a big logistics narrow throat" in these areas, said the first petrol retailer.

Plate data showed a discount for WTI crude oil in Midland, Texas – near Permiana – against the same barrel at the Magellan East Houston terminal – the prime location for USGC refineries and access to export leads – has reached unprecedented levels in the third quarter, averaging $ 18.33 / b, which is an increase from the previous three-year average of $ 2.11 / b.

Western Canada has similarly seen local crude oil estimates compared to NYMEX WTI CMA to invisible discounts. In the third quarter, Western Canadian Select in Hardhurst, Alberta, was estimated at an average $ 27.94 / b discount on WTI CMA, compared to the previous three-year average of $ 13.31 / b.


American refineries do not buy raw material directly from Perm's basin near Midland Texas or from Hardisty to British Columbia. They always have to bear the cost of delivery. However, more oil companies in the United States have been specifically targeting cheaper crude oil prices in North America than in international prices – in earnings for their stellar Q3 performance.

During the invitation of Joseph W. Gorder, CEO of Valero, said that "the discounts in relation to Brent were very attractive", with Valerino "profiting from refineries to 99%", and the company set a new record for sweet light processing raw. More than half of the crude oil processed in the third trimester came from the USGC, which probably involved large volumes of discounted liquid oil.

Similarly, Chairman and CEO of Phillips 66 Greg Garland said during his Q3 call that his company was "the largest producer of heavy Canadian raw materials", allowing its refineries to work at "record levels".

Energy economist Philip Verleger said that companies such as Philadelphia Energy Solutions or PBF Energy, with a concentrated capacity on the east coast, had a much harder financial time in the third quarter, which is reflected in the East Coast refinery. Environmental Impact Assessments showed that the share of crude coal in Q3 refineries was less than 3 million b / d from the previous three-year average.


The permits are undergoing strong brownfield and greenfield gas pipeline projects to mitigate the takeover restrictions. More recently, Plains All American has expanded its 500,000 b / d Sunrise Pipeline in November – although it is currently not near full-scale – and Platts Analytics believes that the current capacity of Permiana can be more than twice as far as mid-2020,

Intercontinental exchange WTI Midland swap is currently weakening in May 2019, when it dropped to $ 7.55 for WTI in Cushing, Oklahoma, about $ 2.65 a b less than the current month-December, according to the fifth settlement. Since May 2019, the market is expected to improve and differs from the constructive structure. The Cal-2019 swap is minus $ 4.55 per fifth, and the kal-2020 replacement is on average 5 cents / b higher than the WTI in Cushing.

Conversely, in western Canada there is no expected increase in gas pipeline sales, which has led to an increase in crude oil on railways and recent producers' announcements to shut down production. Last week the US judge blocked any new construction on the controversial Keystone XL Pipeline, citing environmental issues.

Western Canadian Select Swap CME Group shows a short-term increase in pre-stabilization around $ 25 / b less than WTI's in Cushing. On Friday, the cal-2019 change averaged around $ 27.45 / b, while kal-2020 was minus 25.60 / b, with both spot average prices down to 2018. Up to now: minus $ 26.70 / b, company data showed Platts.

Looking ahead by the end of 2018, Philip Verleger said there are places for US refineries to have a record fourth quarter for raw material processing because the discounts in these areas continue to run.

– Seth Clare, [email protected]

– John-Laurent Tronce, john- [email protected]

– Edited by Pankti Mehta, [email protected]

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