The partnership’s fuels marketing segment generated $3 million of EBITDA during the quarter, higher than last year’s second-quarter amount of a negative $6 million of EBITDA.

Heavy fuel oil operations had generated most of the EBITDA for the segment during the quarter. However, heavy fuel oil margins are lower than margin levels the company has seen in the last several years.

The heavy oil market is experiencing a reduced worldwide demand for bunker fuel, while bunker supply has in the U.S. Gulf Coast and the Caribbean. These bearish market fundamentals caused NuStar’s bunker operations to continue to generate negative EBITDA during the quarter.

NuStar said that it is in the process of implementing profit-generating initiatives for this segment, and its bunker operations should break even in the third quarter and start generating positive EBITDA in the fourth quarter of this year.

Besides challenges in the bunker market, NuStar also highlighted reduced demand for oil storage at certain domestic and international terminals, which is putting downward pressure on storage rates in certain markets as some of its storage contracts come up for renewal.

This should cause third-quarter results to be lower than both the second quarter of 2013 and the third quarter of 2012.

NuStar noted the challenges of securing high rates for storage leases at its terminals in a backwardated market. The partnership is able to renew some U.S. storage contracts, albeit at lower rates.

Meanwhile, NuStar expects the completion of a second 70,000-b/d railcar offloading facility at St. James, La., in the fourth quarter, and seasonally reduced maintenance expenses should more than offset the impact of reduced demand at some of the terminals.

NuStar reported second-quarter net income applicable to limited partners of $21.6 million, or $0.28 per unit, compared to a net loss applicable to limited partners of $251.6 million, or $3.56 per unit, reported in the second quarter of 2012.

NuStar expects its 2013 earnings for pipeline and fuel marketing to be higher than the previous year, and its storage segment results should be on par with 2012.

NuStar, a publicly traded master limited partnership based in San Antonio, is one of the largest independent liquids terminal and pipeline operators in the nation.

NuStar currently has 8,621 miles of pipeline; 87 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids; and 50% ownership in a joint venture that owns a terminal and an asphalt refinery with a throughput capacity of 74,000 b/d.

The partnership’s combined system has approximately 97 million bbl of storage capacity, and NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, the United Kingdom and Turkey.