Viewpoint: AGS Marker grows as potential benchmark

  • Market: Crude oil, Freight
  • 30/12/20

The Argus AGS Marker is poised to emerge as a key benchmark for US crude as Midland-quality WTI liquidity rises at the US Gulf coast, spurred by regional refinery demand as the economy recovers from the strict lockdowns of the early stages of the Covid-19 pandemic.

AGS trade month volume has averaged more than 400,000 b/d since the index was launched 26 June, establishing it as the third-most liquid physical crude assessment in the Americas — behind only WTI Midland and the Argus Sour Crude Index (ASCI).

The new index is the first of its kind, including both waterborne and pipeline transactions across nine locations in a single volume-weighted average normalized to Enterprise Products' Echo terminal in Houston, Texas. The list of locations currently includes terminals in Houston, Corpus Christi and the Beaumont/Nederland area, and may eventually expand to include active terminals in Louisiana.

Volume growth has thus far been capped by difficult-to-work export economics amid a narrow spread between WTI and international benchmark Ice Brent, as well as reduced refinery demand at the US Gulf coast due to poor fuel demand caused by the Covid-19 pandemic and the ensuing recession.

But US Gulf coast refinery utilization has already increased to 80pc ahead of a widely available vaccine for the virus, compared to a low of 63.9pc hit in September. The only other time regional utilization was lower in the last 10 years was during the week Hurricane Harvey made landfall along the Texas and Louisiana coasts in 2017.

Prompt WTI has meanwhile widened its discount to second-month Ice Brent past $3/bl for the first time since September, suggesting US crude is becoming more economically attractive in global markets relative to competing grades priced against the European benchmark.

The spread is poised to widen further as US production returns with demand, and Brent gains support from an earlier distribution schedule of the Covid-19 vaccination, which should boost demand for transportation fuel.

Refinery demand and the improving export economics will likely spur more fob trade activity at the US Gulf coast and more pipeline shipments from the Permian basin to the Texas Gulf coast.

Spot shipments on Magellan's 275,000 b/d Longhorn and 440,000 b/d BridgeTex pipelines to the MEH terminal fell to near zero in the second half of 2020 as the WTI Houston premium to WTI Midland fell to less than a third of pipeline tariff rates, discouraging some speculative trade.

But Magellan has since said it will allow third-party pipelines to deliver into its WTI pool at the MEH terminal and access its Houston Distribution System (HDS), which could boost spot liquidity.

Additionally, the fourth-quarter start to Enterprise's 450,000 b/d Midland-to-Echo 3 pipeline is boosting liquidity at the Echo terminal as flows ramp up. More than 110,000 b/d of WTI at Echo has been reported for inclusion in the AGS Marker so far in the January 2021 trade month, already tripling the record-high of 34,760 b/d set during December trade.

That volume is poised to continue growing, with at least one more shipper expected to begin service on the Midland-to-Echo line in 2021, while Enterprise plans to expand storage capacity at Echo in the first quarter.


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Crane barge arriving at Baltimore bridge tonight

Crane barge arriving at Baltimore bridge tonight

Houston, 28 March (Argus) — The first major piece of equipment capable of beginning to clear the blocked Port of Baltimore, Maryland, is expected to arrive onsite tonight. The Chesapeake 1000 crane barge, capable of lifting 1,000 short tons with its a 231ft-long boom, is expected to arrive at the site of the collapsed Francis Scott Key Bridge near Baltimore at 11pm ET on 28 March, the US Coast Guard (USCG) told Argus . Both the crane and the tug pulling it, Atlantic Enterprise , are owned by Donjon Marine. It is currently the only crane on route to the collapsed bridge, the USCG said. There is no official timetable for the reopening of the port after the Interstate 695 highway bridge over the Patapsco River was hit in the early hours of 26 March by a container ship and collapsed, with the debris and ship blocking the waterway. The operator of the ship, Maersk, has contracted with marine salvage company Resolve Marine to refloat the vessel and remove it from the area, according to the USCG. It is not clear who has contracted for the Chesapeake 1000. Despite the inbound crane, it could take weeks or even months to clear debris and reopen the waterway under the collapsed bridge according to a engineering professor at the nearby Johns Hopkins University. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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'Weeks, months' to reopen Baltimore waterway: professor


28/03/24
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28/03/24

'Weeks, months' to reopen Baltimore waterway: professor

Houston, 28 March (Argus) — It could take weeks or even months to clear debris and reopen the waterway under the collapsed Francis Scott Key Bridge in Baltimore, Maryland, according to a engineering professor at the nearby Johns Hopkins University. As of Wednesday, there was no official timetable for the reopening of the Port of Baltimore after a major highway bridge over the Patapsco River was hit in the early hours of 26 March by a container ship and collapsed, with the debris and ship blocking the waterway. "I'd be shocked if it's weeks, but I don't think it'll take even a year" to clear the waterway, structural engineer and Johns Hopkins professor Benjamin Schafer said Wednesday. He expects the rebuild of the bridge to take significantly longer. "I've lived through quite a few civil infrastructure projects and they're rarely less than 10 years. So I think that's what we're looking at," Schafer said. He noted that it took five years to build the original Francis Scott Key Bridge and seven years to repair the Sunshine Skyway Bridge in Tampa Bay, Florida, after a similar collapse in 1980. Still, "this is definitely not a national supply chain crisis," John Hopkins operations management professor Tinglong Dai said Wednesday. "The effect will be mostly local, mostly minimal and mostly temporary." The bridge collapse and port closure is also unlikely to trigger a global supply chain crisis, he said. The Port of Baltimore is an important but "niche" port specializing in automobile imports and exports, Dai added. "The supply chain has evolved...I have already seen a lot of rerouting happening." Automakers started adjusting their supply routes away from the top port for US vehicle imports the day of the collapse, including General Motors, Ford and Mercedes-Benz. Baltimore is also a major port for coal exports, which may start to shift to terminals to the south in Hampton Roads, Virginia. Freight rates for ships that carry coal could see increases in global markets Other commodities like asphalt and caustic soda that move through the port will see challenges, while organic agriculture imports may see less problems due to seasonal flows. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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No timetable yet for reopening Port of Baltimore


27/03/24
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27/03/24

No timetable yet for reopening Port of Baltimore

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Baltimore bridge collapse to raise retail fuel prices


27/03/24
News
27/03/24

Baltimore bridge collapse to raise retail fuel prices

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Ethanol constraints minor on Baltimore closure: Update


27/03/24
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27/03/24

Ethanol constraints minor on Baltimore closure: Update

Houston, 27 March (Argus) — Ethanol flows in the US northeast may only see minor near term constraints following the closure of the Port of Baltimore due to the collapse of a bridge at the mouth of the waterway. Producers and other market participants expect longer local transit times for trucks carrying hazardous materials — including ethanol — to retail stations because of the collapse of the Francis Scott Key Bridge, which carried nearly 12.4mn cars and trucks in 2023, according to Maryland state data. This will lead to higher associated costs, but market sources say the region's supply chain flexibility, rail access and available stocks should mitigate near-term ethanol supply interruptions. Ethanol rail deliveries into the Baltimore market are expected to increase, offsetting the loss of barge supply for the duration of the port's closure. Railroads Norfolk Southern and CSX have rail access at the Port of Baltimore, while Kinder Morgan operates the primary transload terminal. US east coast ethanol stocks in March are at their highest monthly average since April 2020 at 8.76mn bl, according to the Energy Information Administration. By Payne Williams Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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