Stockpair traders should keep an eye on these events today:
JPY Exports (YoY)
JPY Imports (YoY)
JPY Trade Balance
USD Chicago Fed National Activity
USD CB Leading Index (MoM)
Is the US Sinking Under the Glut of Crude Oil?
U.S. crude-oil supplies rose by 10 million barrels last week, the biggest one-week gain since 2001, according to the U.S. Energy Information Administration. But much of the increase happened on the West Coast, far from the gushing wells in North Dakota and Texas. Crude oil inventories in the Gulf Coast area hit a record high of 207.2 million barrels on April 11, months after the controversial Keystone XL oil pipeline’s southern leg opened, a government stat shop said Thursday.
The southern part of TransCanada Corp.’s pipeline is called the Marketlink Pipeline, and runs from Cushing, Okla., to the Texas Gulf Coast, the Energy Information Administration (EIA) said. It started operation in January, but the most controversial piece, known as Keystone XL, has been delayed amid objections from green groups. If built, it will run from Nebraska to Albert’s oil sands. The EIA said Marketlink is the main factor behind the record inventories. It has a capacity of 700,000 barrels per day, and will likely average 525,000 barrels a day this year.
The agency also attributed the record to growth in oil production and refineries entering seasonal maintenance. The inventory total includes tank farms, refineries and pipelines.
An industry agency which tracks oil imports, says the massive jump in oil stockpiles comes down to a big coincidence. Four tankers delivered Colombian crude to West Coast refineries last week, leading to a 1.5-million-barrel boost in Colombian exports to the region, which stretches from Arizona to Alaska, according to the data. But the fact remains with the US producing more oil than ever; there is a lack of transportation to carry the oil to producers, users and ports.
BNSF Railway officials have told federal regulators they’re concerned that older, less-robust tank cars will end up on U.S. oil trains because of Canadian railroad pricing policies discouraging them. Canadian Pacific and Canadian National railroads recently imposed surcharges on shippers using older tank cars known as DOT-111s to discourage their use for crude oil shipments. Tank cars built since October 2011 have thicker steel to make them more puncture-resistant. BNSF announced in February that it will purchase up to 5,000 new tank cars and lease them back to oil shippers. That is an unusual step because railroads typically don’t own tank cars; shippers usually purchase or lease them on their own.
Oil prices didn’t move much in response to the eye-popping inventory data. After the EIA release on Wednesday, prices settled up a penny at $103.76 a barrel on the New York Mercantile Exchange.
The muted reaction comes down to the West Coast’s isolation from the rest of the market. The region isn’t connected by pipeline to Midwestern oil production or refineries, which play a lead role in setting the price of Nymex crude futures. Traders therefore focused on the six-million-barrel rise for inventories outside the West Coast – a large but not unusual gain, said Stephen Schork, editor of energy trade publication The Schork Report.
By Thursday, market participants had shifted their focus from the overall stockpile rise to falling supplies at a key storage hub in Oklahoma where the benchmark U.S. contract is priced. Futures rose to $104.30 a barrel, a six-week high.