Magellan Midstream Partners LP on Nov. 2 raised its annual forecast for shipments of refined products thanks to increased demand for jet fuel and distillates.
The pipeline operator said it expected the shipments to rise 14% from 2020, compared with 13% earlier, as volumes from expansion projects in Texas overcome the lingering impact of the COVID-19 pandemic.
Gasoline shipments will be 10% higher than a year earlier, distillates will rise 17% and aviation fuel will jump 40%, Magellan said. That compares with a July forecast for a rise of 13% in gasoline, 10% in distillates and 25% in aviation fuel.
Magellan also increased its free cash flow projection for the year by $20 million to $1.29 billion.
Transportation and terminals revenue for refined products rose 13.8% in the third quarter as a post-lockdown surge in demand drove volumes. It also benefited from the mid-year 2021 tariff increase, which averaged nearly 3% across the products.
But revenue from crude transportation and terminal fell 24.4% to $116.9 million due to lower tariff rates and reduced demand for storage.
Several of Magellan’s higher-priced contracts on the Longhorn pipeline, which flows from Crane, Texas, to Houston, expired late last year in a blow to the average tariff.
Storage revenues were lower than a year earlier when it had benefited from increased short-term storage utilization at higher rates due to a surge in future prices above the rates for immediate delivery.
While crude prices have surged above $80/bbl, producers have focused on boosting shareholder returns and maintaining capital discipline in a departure from past boom cycles.
The company said there was still room for gasoline demand to recover to pre-pandemic levels, while crude capacity was still overbuilt.
Rival Enterprise Products Partners LP had reported an 18% rise in crude oil pipeline volumes.
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