The return of Venezuelan crude to the US Gulf coast is expected to boost asphalt stocks this fall following limited heavy crude availability.
A pair of Chevron-linked oil tankers carrying Venezuelan crude arrived at Gulf coast ports this week, according to Kpler data, the first since the US returned Chevron's waiver to export earlier this summer.
Market participants expect rising flows of heavy Venezuelan Boscan crude to increase asphalt inventories in October, after stocks reached a record low of 4.7mn bl in May — 16pc below May 2024 levels and the lowest level for the month since 2014, according to Energy Information Administration (EIA) data.
Market participants reported tight supplies in the third quarter as well, with Gulf coast wholesale values holding above the Argus-calculated coker yield since late July.
Lower heavy crude flows prompted lighter crude diets which dented asphalt production. The weighted average gravity of Gulf coast crude runs jumped up to 35.37° API in May, the highest level for any month in US EIA data going back to 1985.
Venezuelan crude deliveries dried up in late June after the resumption of US sanctions against the country pulled about 200,000 b/d out of the Gulf coast market. May flows were already down by 41pc on the year.
Gulf coast imports of Canadian crude also declined to 10.56mn bl in May, the lowest level for the month since 2014 as an April spill on South Bow's 622,000 b/d Keystone pipeline reduced flows by 13pc in the second quarter.
Meanwhile, the spread between WTI and heavy Western Canadian Select has averaged about $12/bl so far this year, roughly 22pc below levels over the same period last year.
Some refiners expect light-heavy crude spreads to widen over the third and fourth quarters on increased medium and heavy crude availability from Venezuela, Canada and the Opec+ group of countries.
Wider light-heavy crude differentials, lower crude costs and slowing seasonal paving demand could push asphalt prices down across the US in the fourth quarter.
The US EIA expects Brent crude values to average $58/bl over the fourth quarter this year, about 15pc below levels seen so far in the third quarter.
