US Crude Oil Exports Spikes To Record High

FT.COM- US exports of crude oil have leapt to a new high of nearly 2m barrels per day, a landmark figure for a country that banned most exports just two years ago.

The shipments have been reaching customers in Canada, Europe and increasingly Asia, breaking into markets prized by the Opec cartel.

Combined exports of crude and refined fuels such as petrol and diesel have also pushed the US’s net petroleum imports to the lowest levels on record.

Federal law prohibited exports of domestic crude to all markets except Canada for 40 years until its repeal in late 2015. Exports climbed gradually in 2016, averaging less than 600,000 b/d.

In recent weeks they have exploded, averaging 1.984m b/d last week and 1.491m the week before, the Energy Information Administration said Wednesday.

The US still remains a top buyer of foreign crude, having imported 7.2m b/d last week from suppliers such as Canada, Saudi Arabia and Venezuela.

The US exports are nevertheless creating new competition for members of Opec. “It is worrying,” said Waleed Al-Bader, deputy managing director for crude and derivatives marketing at state-run Kuwait Petroleum Corporation, speaking last week on the sidelines of the Appec oil conference in Singapore.

A Dubai-based oil trader added: “Only now are Middle Eastern producers starting to worry about growing US exports … Thing is, these US exports are only just beginning to come over. There are many more barrels coming.” The exports have been propelled by a deep discount for American crude in comparison to Brent, the international benchmark. On Wednesday Brent crude settled at $55.80 a barrel, while West Texas Intermediate crude was $49.98 a barrel.

Production cuts from Opec, whose members are concentrated in the eastern hemisphere, has helped push up the Brent price. Hurricane Harvey also slowed US refineries’ intake of domestic oil, causing supplies to build up and prices to fall.

“This is classic Oil Markets 101: too much crude in the US and too little crude elsewhere means that US prices weaken relative to global prices, and exports increase to address the imbalance,” Société Générale said in a note.

Tom Ramsey, chief executive of JupiterMLP, an oil trading and transport firm in Texas, said: “Opec cutting has forced the value of Brent higher, which then pushes the exports from the US.”

US refineries and processors also exported more than 5m b/d of petroleum products last week, pushing total US net petroleum imports to 2.75m b/d, the lowest in weekly records dating to 1991. The US sells large amounts of petrol and diesel to Latin America and Europe.

US petroleum products exports have been rising for years, thanks to an abundance of domestic crude supplies and the efficiency of the local refinery industry. The Trump administration has endorsed the shipments and adopted “energy dominance” as a catchphrase. ‎

Alan Eyre, director of Middle East and Asia for the US state department’s bureau of energy affairs, told the Financial Times: “The US encourages increased energy exports worldwide, including to Asia.”

Courtesy: www.ft.com