Crude oil shipments by top U.S. railroads fell nearly 12 percent in the first quarter of this year from the previous three months, the American Association of Railroads said, a drop likely tied to refinery work on coastal plants.
oThe AAR said about 897,172 barrels per day - or 113,089 carloads - originated on U.S. Class I railroads in the first three months of the year, down from more than 1 million bpd in the fourth quarter of 2014. The decline came during heavy seasonal refinery maintenance, which reduces demand for crude to process into fuels.
In the East Coast region, where several refineries receive North Dakota Bakken crude via rail, inputs to processing units were 23 percent lower in February at 780,000 bpd compared with November, Energy Information Administration data show.
On the West Coast, where Washington state refineries also regularly get Bakken shipments, such inputs were down 9 percent in February to 2.4 million bpd compared with December.
The U.S. Gulf Coast region also saw a 6 percent decrease to 8.1 million bpd after a two-month slide that started in December, the EIA data show. The Gulf Coast is home to nearly half of the total 17.9 million bpd of U.S. refining capacity.
U.S. crude prices are 45 percent lower than in June last year, but analysts say the spread between U.S. crude and London’s Brent has more influence on oil-by-rail movements than the outright price.
If the spread is wide, oil-by-rail is profitable even with higher transportation costs. A narrow spread diminishes that cost benefit, and coastal refiners may take more imports until it widens again.
In January, the spread averaged less than $5 a barrel, but widened in February and March.