U.S. Gulf Coast imports of light crude will probably drop to zero by 2014 amid North America’s “unprecedented oil boom,” according to Bank of America Corp.
Shipments of light-grade crudes to the U.S. region, which are currently about 500,000 barrels a day, will decline as domestic production displaces imports, the bank said in a note dated yesterday. Light-crude accounts for 15 percent of U.S. total imports, compared with 20 percent a two years ago.
“Rising volumes of light crude from Texas and North Dakota steadily displaced the need for seaborne imports of similar quality from places like Nigeria and Angola,” Sabine Schels, a commodity strategist in London said. “With transportation infrastructure now expanding significantly, more and more of these domestic light crudes will travel to the major refining centers around the country, particularly the Gulf Coast.”
The increase in domestic light-crude output won’t displace imports of heavier grades because of demand for distillate products such as diesel and heating oil.
“We estimate that running light crude through complex refineries could restrict throughput by 20 percent to as much as 50 percent,” the bank said. “Further, if refiners blend domestic light supplies with heavy imported grades they will likely produce too many light ends and not enough distillates.”
West Texas Intermediate crude prices could “collapse” to $50 a barrel in 18 to 24 months because of the surging supplies, the bank said. WTI is trading at about $96.40 today.