US Seaway Pipeline Open, Flowing Crude Oil to Gulf Coast
US Seaway Pipeline Open, Flowing Crude Oil to Gulf Coast
EPD, ENB, MPC, VOL, HFC, TSO, PSX
Crude Oil transportation in the Seaway pipeline resumed Friday at the pipeline’s full capacity of 400,000 BPD now available to shippers wanting to move Crude Oil from the storage point at Cushing, OK, to the Gulf Coast. Seaway is a 50-50 Joint Venture between Enterprise Products Partners LP NYSE: EPD and Enbridge Inc. NYSE: ENB.
Originally the Seaway pipeline transported Crude Oil from the Gulf Coast to Cushing, but the production increases in the US mid-continent created demand for the less expensive domestic Crude Oil at Gulf Coast refineries and the pipeline’s owners reversed the flow.
Most US Crude Oil trades at a price differential of more than 20 bbl to Brent Crude imports to the Gulf Coast.
US refiners able to get the cheaper domestic Crude, and are able to post better margins.
Gulf Coast refiners have been locked into higher priced Brent and Louisiana Light Sweet Crudes, while inland refiners have been able to source the cheaper Crude Oil.
This has worked to the benefit of Marathon Petroleum Corp. NYSE: MPC, HollyFrontier Corp. NYSE: HFC and Tesoro Corp. NYSE: TSO and to the detriment of Valero Energy Corp. NYSE: VLO, which has many of its refineries located along the Gulf Coast.
Refiners stocks have put in substantial gains over the past 12 months, with Marathon up more than 88%, Tesoro up nearly 81%, and HollyFrontier up nearly 68%.
Valero is up nearly 70%, with Phillips 66 NYSE: PSX the laggard with a share price gain of “just” 55% since its IPO last Spring.
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Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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