The recent trend of low operable capacity and high utilization rates will give way to an increase in distillation capacity and lighter maintenance. Consequently, the growth of operable capacity will outpace crude demand. The next 12 months will feature higher operable capacity that will lead to bearish pressure on petroleum product spreads and pressure utilization rates lower.
Higher prices are incentivizing accelerated growth in the Bakken. Although natural gas processing capacity remains a looming constraint in some locations, crude oil production is forecast to reach 1.4 million b/d by next summer. At this pace, it won’t be long before pipeline capacity becomes full and incremental growth will be dependent on rail once again.