Nov 2 (Reuters) - Magellan Midstream Partners LP (MMP.N) on Thursday 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 mln 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 to Houston, Texas, 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 a barrel, 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 (EPD.N) had reported an 18% rise in crude oil pipeline volumes. read more
Reporting by Arathy S Nair in Bengaluru; Editing by Aditya Soni
Our Standards: The Thomson Reuters Trust Principles.
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November 03, 2021 at 02:57AM
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Magellan raises forecast for refined products shipments on jet fuel demand - Reuters
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