ANL 31.50 Decreased By ▼ -0.29 (-0.91%)
ASC 18.90 Decreased By ▼ -0.83 (-4.21%)
ASL 26.27 Decreased By ▼ -0.13 (-0.49%)
AVN 91.95 Decreased By ▼ -0.05 (-0.05%)
BOP 8.30 Decreased By ▼ -0.06 (-0.72%)
BYCO 12.85 Increased By ▲ 0.06 (0.47%)
DGKC 127.20 Increased By ▲ 0.10 (0.08%)
EPCL 47.90 Decreased By ▼ -0.86 (-1.76%)
FCCL 24.18 Increased By ▲ 0.12 (0.5%)
FFBL 26.55 Increased By ▲ 0.25 (0.95%)
FFL 17.80 No Change ▼ 0.00 (0%)
HASCOL 11.32 Decreased By ▼ -1.01 (-8.19%)
HUBC 80.25 Decreased By ▼ -0.75 (-0.93%)
HUMNL 9.12 Increased By ▲ 0.36 (4.11%)
JSCL 23.40 Decreased By ▼ -0.93 (-3.82%)
KAPCO 43.07 Decreased By ▼ -0.18 (-0.42%)
KEL 4.30 Decreased By ▼ -0.21 (-4.66%)
LOTCHEM 15.99 Increased By ▲ 0.19 (1.2%)
MLCF 48.75 Increased By ▲ 0.10 (0.21%)
PAEL 35.40 Decreased By ▼ -0.40 (-1.12%)
PIBTL 11.96 Increased By ▲ 0.75 (6.69%)
POWER 10.20 Decreased By ▼ -0.16 (-1.54%)
PPL 90.49 Decreased By ▼ -0.66 (-0.72%)
PRL 26.15 Increased By ▲ 0.50 (1.95%)
PTC 13.00 Decreased By ▼ -0.01 (-0.08%)
SILK 1.84 Increased By ▲ 0.18 (10.84%)
SNGP 47.58 Decreased By ▼ -0.77 (-1.59%)
TRG 164.60 Decreased By ▼ -0.90 (-0.54%)
UNITY 44.75 Decreased By ▼ -2.35 (-4.99%)
WTL 4.14 Increased By ▲ 0.22 (5.61%)
BR100 5,278 Decreased By ▼ -22.7 (-0.43%)
BR30 27,522 Decreased By ▼ -167.85 (-0.61%)
KSE100 48,239 Decreased By ▼ -195.99 (-0.4%)
KSE30 19,426 Decreased By ▼ -94.82 (-0.49%)

HOUSTON: Crude inventories on the US Gulf Coast are near their low for the year and may touch a two-year low, said traders, as US crude's wide discount to benchmark Brent fuels exports and the region's refineries run at high utilization rates.

Crude in storage along the US Gulf Coast on Dec. 8 was 217.5 million barrels, near 2017's low of 217.0 million barrels, according to the US Energy Information Administration (EIA). The region's storage hit a record at 280.9 million barrels at the end of March.

"All indicators appear to be trending downward for most of the month," said one trader on Wednesday.

The drop in Gulf Coast, or PADD 3, inventories reflects two key trends: refineries running at 93.4 percent capacity, up from 90.5 percent a year ago, and strong crude exports from the region. Exports hit 1.3 million barrels per day in September, more than double the rate of January, EIA figures show. Wide crack spreads are encouraging refiners to run at high rates.

PADD 3 crude inventories in the country's largest collection of refineries typically reach their lowest point of the year in December or January, according to EIA statistics. In part, the drop follows refiners draining stocks during December to avoid end of year taxes on business personal property, which includes crude oil.

At Dec. 31, parts of Texas and Louisiana assess ad valorem taxes, or taxes based on the value of holdings on that day. The taxes and last-in, first-out accounting creates an incentive for refiners to draw down inventories to cut their tax bill.

These taxes, along with last-in, first-out accounting to value assets, create an incentive to draw down crude stocks in the region at the end of the year by not having to pay the tax inventory stored on their property.

 

Copyright Reuters, 2017