From: Wagner, Jonathan
Sent: Tuesday, April 14, 2020 3:04:52 AM (UTC-06:00) Central Time (US & Canada)
To: Wagner, Jonathan
Subject: Key Oil Flow for U.S. Crude Set to Reverse Amid Market Turmoil

(Bloomberg) –The latest sign that the oil market has gone off-kilter: crude oil is once again set to move from the U.S. Gulf Coast to Cushing, Oklahoma.

Enterprise Interstate Crude LLC, a subsidiary of Enterprise Products Partners LP, said in a filing to regulators Monday that it planned to start a temporary service using leased pipeline capacity after receiving interest from at least one shipper to move oil to the inland storage hub.

Enterprise’s 2012 reversal of the Seaway pipeline to carry crude to the coast from Cushing, the delivery point for West Texas Intermediate futures, was a watershed moment for the U.S. shale boom, as the center of the country no longer needed to rely on overseas supplies.

The reversal allowed growing supplies of low-cost U.S. and Canadian oil to displace seaborne imports, and helped the country beome of of the world’s leading suppliers after export restrictions were loosened in 2015. It also led to a substantial narrowing of prices for WTI and the global benchmark Brent, one of the most widely traded crude spreads in the world.

The filing doesn’t say which pipeline Enterprise intends to use, but it does say it plans to ship from its station in Katy, Texas, which is on the Seaway system. Seaway has two pipelines with a combined capacity of 850,000 barrels a day, and is jointly owned by Enterprise and Enbridge Inc.

An Enterprise spokesman didn’t immediately return an emailed request for comment sent after normal business hours.

Measures to stem the Covid-19 outbreak have crushed fuel demand, with gasoline consumption down almost half from a year ago. Refineries in the Gulf Coast and elsewhere have been forced to cut operations to a minimum just as a price war between Saudi Arabia and Russia flooded the world with crude.

“Given the current turmoil in the crude oil market, including impacts on both refinery and export demand, there is strong market interest to access the Cushing storage market,” Enterprise wrote in the filing.

Jonathan Wagner
Ion Energy Group
180 Maiden Lane 25th Floor
New York, NY  10005
Direct: 212-709-2261
Cell: 914-843-6986

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