A refined products glut in the US Midcontinent has resulted in tanks at St. James to fill as refinery run rates decline.
Crude oil stocks in St. James, Los Angeles soared by 1.9 million barrels to a record high the week ending February 26, and could continue to increase if crude demand falls further at Midcontinent refineries, according to Genscape.
Oil analysts Dylan White and Amanda Fairfax Dirkes say that Valero Energy has cut production at its Memphis refinery in early February to combat weak profits. Sources estimate that the refinery may decrease crude processing by 25%.
The St. James storage build week ending February 26 coincided with decreased outgoing crude pipeline volumes. Flow rates declined 88,000 bpd to 225,000 bpd on the Marathon-operated 1.2 million bpd St. James to Patoka, Capline Pipeline, which feeds Valero’s Memphis refinery.
Additionally, the inventory builds at St. James were most likely influenced by a weaker Louisiana light sweet differential.