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Decoding US Crude Oil Movement by Rail in May 2016

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Aug. 9 2016, Published 11:48 a.m. ET

US crude oil movement by rail

The EIA (U.S. Energy Information Administration) reported that US crude oil movement by rail rose by 424,000 barrels to 14,574,000 barrels in May 2016—compared to the previous month. US crude oil movement by rail fell to 14,150,000 barrels in April 2016. It was the lowest US crude oil movement by rail level since June 2012. US crude oil rail movements include shipments to and from Canada. The movement of US crude oil by rail had been falling since October 2014. It rose by 3% month-over-month in May. However, it’s down 20% so far in 2016.

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Crude oil movement by PADD regions 

The EIA added that US crude oil movement by rail averaged at 470,000 bpd (barrels per day) in May 2016.

The EIA divides the US into five storage regions. The crude oil receipts to these regions for May 2016 are listed below:

  • East Coast (or PADD1) receipts from the US and Canada were at 181,000 bpd in May 2016—compared to 474,000 bpd for the same period in 2015.
  • Midwest (or PADD 2) receipts from US and Canada were at 36,000 bpd in May 2016—compared to 26,000 bpd for the same period in 2015.
  • Gulf Coast (or PADD 3) receipts from US and Canada were at 105,000 bpd in May 2016—compared to 304,000 bpd for the same period in 2015.
  • Rocky Mountain (or PADD 4) receipts from US and Canada were 9,000 bpd in May 2016.
  • West Coast (or PADD 5) receipts from US and Canada were at 139,000 bpd in May 2016—compared to 130,000 bpd for the same period in 2015.

PADD 1, PADD3, and PADD 5 are the most active for crude-by-rail receipts. On the other hand, PADD 2 is the most active for rail shipments.

Impact on MLPs 

The rise in crude oil movements by rail influences midstream MLPs including Enterprise Product Partners (EPD), Kinder Morgan (KMI), Energy Transfer (ETP), and Genesis Energy (GEL).

The rollercoaster ride in crude oil prices impacts ETFs like the Guggenheim S&P 500 Equal Weight Energy ETF (RYE), the VelocityShares 3X Inverse Crude Oil ETN (DWTI), and the SPDR S&P Oil & Gas Equipment & Services ETF (XES). 

In the next and final part of this series, we’ll take a look at some crude oil price forecasts.

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