Seaway says oil flows reduced, Cushing storage high

HOUSTON (Reuters) - Seaway crude oil pipeline flows have been reduced, and a possible reason is high storage levels at Cushing, Oklahoma, a company spokesman said Thursday.

Shipments were 30 percent less in June than the average for the first quarter, and July nominations remain reduced, said Rick Rainey, spokesman for Seaway operator TEPPCO.

Rainey said the average for the first quarter was 174,000 barrels per day. Thirty percent less than that is about 122,000 bpd. July nominations total about 164,000 bpd, he said.

"Volumes were certainly impacted by availability of storage at Cushing," Rainey said.

Maximum capacity on the 500-mile line from Freeport, Texas, on the U.S. Gulf Coast, to Cushing, Oklahoma, delivery point for NYMEX oil contracts, is 350,000 bpd.

Storage at Cushing rose in the last three weeks and topped 30 million barrels last week even as overall U.S. storage levels have fallen, U.S. government data showed.

The exact maximum storage capacity at Cushing is difficult to determine because tanks are in private company hands, but NYMEX has said it exceeds 40 million barrels.

Some traders cited economic reasons more than a storage squeeze as reasons for reduced Seaway shipments, citing the recession, low fuel demand and weak refining margins.

"There's just no reason to bring incremental crude to the Midcontinent," one said.

Seaway shipments neared maximum capacity in the fourth quarter of 2008, but have been down since then as oil prices have fallen from 2008 peaks over $145 per barrel to $60 now.

(Reporting by Bruce Nichols; Editing by John Picinich)