Latin American Oil Finds New Buyers as Pipeline Shifts Flows

Latin American Oil Finds New Buyers as Pipeline Shifts Flows

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(Bloomberg) — Refiners on the US Gulf Coast are increasingly turning to Latin American heavy crude as Canada’s recently expanded Trans Mountain pipeline reroutes global oil flows. 

Signs of the shifting tides include Mexican state oil company Pemex recently buying Colombian oil for its refinery in Texas and American refiner Valero Energy Corp. scooping up Colombian grades that typically sail to India and China. 

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North American fuelmakers have seen their typical supplies thin out as the expanded Trans Mountain pipeline sends more of Canada’s crude to the Pacific Coast. At the same time Pemex is keeping more Mexican crude to run its new Dos Bocas refinery, according to market participants, who spoke on condition of anonymity.

In recent weeks, some Latin American oil grades that typically flow to California are also making their way to the Gulf Coast, according to Argus market data.

Trans Mountain has helped raise prices for Canadian crude, making Latin American oil of similar quality attractive again. For example, Cold Lake crude — a heavy Canadian grade often used by Gulf Coast fuelmakers — traded at a discount of $4.80 a barrel to benchmark West Texas Intermediate oil in the US Gulf Coast market on Tuesday. That’s narrower than the average discount of $7.40 last year. 

From the startup of the expanded Trans Mountain in May through July, Gulf Coast refineries imported about 485,000 barrels of Canadian crude a day, the lowest amount for that period since 2018, according to data from the Energy Information Administration. 

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Pemex has already bought three cargoes of Colombian oil for its Deer Park refinery in Texas since April. Valero bought Colombian grades Mares and Apiay, two types that are typically shipped to Asia. 

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