The Twists and Turns of US Oil Exports and Imports
The price of crude oil plummeted five percent yesterday, after the release of United States government data showing unexpected gluts in crude and fuels inventories.
A couple of days before, the Wall Street Journal published an analysis showing US monthly oil exports nearly tripling in recent months. US oil producers exported a record 1.3 million barrels of oil a day in May, up from 442,000 barrels a day in December, most of that headed to Asia.
Less than two weeks before that, oil producing countries—OPEC and eleven non-OPEC countries, including Russia—met in Vienna to extend last December’s agreement to cap crude output in a move designed to support oil prices.
The increase in US exports and the OPEC production cap appears to be related, as exports began to grow at the time OPEC and its allies agreed to limit their contribution to global supply.
But in another unexpected twist, the data showing soaring US crude and fuel stockpiles—the most since 2008—also included another tidbit: that US oil exports may have hit a peak and are now in decline.
The Energy Information Administration’s weekly report on a 3.3 million-barrel inventory spike apparently was caused by higher imports of crude and a sharp decline in exports. The figures reversed a weeks-long trend of lower inventory levels in the US.
Behind the shift in the US import/export picture is a tightening in the spread between the global crude benchmark Brent and its US equivalent, West Texas Intermediate, in the second half of May. A narrower gap, now standing at $1.99, encourages imports and makes US exports more expensive. US crude exports fell by by a net 390,000 barrels a day last week.
Experts fear that the latest signs show a renewed glut of oil, spurring further price decreases. Oil producers have complained about the global price been hovering around the $50 per barrel mark in recent months; it’s now around $45.
Earlier this year the Energy Information Administration released a report predicting oil prices would reach $55 per barrel this year. Given these latest developments, that report could very well be outdated.