The oil stockpiles at the U.S Gulf Coast are nearing the highest record amount, pressuring down the domestic grade oil prices. Traders and analysts said this pressure will be felt through the end of the year and coming into the next year. U.S Gulf Coast oil stocks, known as PADD III, were seen near-record levels in reason of cheap imports, weak refining demands and sluggish exports in the last several weeks. Traders are concerned that rising in the coronavirus cases will sustain the suppressing demand.
Houston's WTI crude for delivery from August 2020-June 2021 ranged between $0.93/barrel- $1/barrel higher than U.S crude futures, according to CME settlements, and traded in early May at a $3.75 premium to Cushing, Oklahoma. West Texas Sour traded at a lower $0.63/barrel to U.S crude futures in early June. This sour grade delivered to Midland reaches its lowest in almost two months.
Gulf Coast prices weakness due to glut storage has slowed down the flow of crude oils to the region from inland. Oil shipped from Cushing to Gulf Coast in May was reported lower by 15,000 barrel/day lower than March level, according to Genscape data.
Gulf Coast stocks hit a record highest production last month at 308 million barrels, U.S Energy Information Administration data showed.
The benchmark for sour U.S Gulf Coast grades, the Mars Sour, was traded at a $1.05 premium to U.S crude futures on Wednesday, July 1, lower than early May level at more than $4 premium. For December delivery, Mars are traded at a lower $0.75 premium, showing market predictions of the grade will remain low until the end of the year.
