Canadian crude oil exports from the U.S. Gulf Coast saw a slight decline in June, even as the Trans Mountain pipeline (TMX) expansion started operations. Despite predictions that the new pipeline would significantly alter crude flows, exports have remained relatively stable.
Steady Export Levels Amid New Pipeline Operations
In June, about 150,000 barrels per day (bpd) of Canadian crude were exported from the U.S. Gulf Coast, a slight decrease from the monthly average of 170,000 bpd over the past year, according to data from ship tracking services Kpler and Vortexa. The TMX expansion, which began in May, added 590,000 bpd of capacity for crude deliveries to Canada’s Pacific Coast, facilitating greater access to markets in the U.S. West Coast and Asia.
Rohit Rathod, an analyst at Vortexa, explained that the ease of loading very large crude carriers (VLCCs) at the Gulf Coast has helped maintain high levels of Canadian exports from this region. VLCCs, capable of carrying up to 2 million barrels of oil, offer a logistical advantage over smaller vessels limited by port draft restrictions in Vancouver.
Global Market Shifts and TMX Impact
The TMX pipeline expansion has the potential to reshape global oil flows and freight rates. Increased shipments from Canada’s West Coast to Asia could reduce exports from the U.S. Gulf Coast to markets like India, China, and South Korea. Furthermore, it could displace Latin American crude in Asian markets, forcing those countries to seek alternative buyers.
Despite these shifts, two supertankers and two smaller vessels loaded Canadian crude grades from the U.S. Gulf Coast in June, destined for refineries in India, China, Spain, and Peru. For instance, Reliance Industries shipped 2 million barrels of Canadian crude from Vancouver to its refinery in Jamnagar, India, in May and later loaded a supertanker off the coast of Texas for an August delivery to India.
Future Projections and Market Dynamics
Westbound volumes of Canadian crude on the Trans Mountain system increased by more than 300,000 bpd since TMX deliveries began, according to energy data provider Wood Mackenzie. However, the utilization of Enbridge’s Mainline, a competing pipeline moving crude from Alberta to the U.S. Midwest, remained largely unchanged in June and early July.
Dylan White, an analyst at Wood Mackenzie, noted that while the Mainline pipeline’s usage held steady, the inventory cushion in Western Canada is depleting, which may eventually lead to a reduction in Canadian crude flows to the Midwest and Gulf Coast. Analysts also highlighted that weak Chinese demand could hinder these flows in the coming months.
In July, two loadings of 500,000 barrels of Cold Lake Blend from the U.S. Gulf Coast were recorded. The ongoing adjustments in the market reflect the broader impact of the TMX expansion and the evolving landscape of global crude oil trade.
Source: Reuters
