Waterborne exports of crude from the United States increased 5.662mn barrels (bbls) to reach a record high of 9.025mn bbls (1.289mn bpd), for the week ending April 21, 2017, according to Genscape’s North American Waterborne Crude report.
During the week ending April 21, exports eclipsed the previous high-water mark of 7.264mn bbls (1.038mn bpd) set the week ending March 3, Genscape data shows. As of April 21, the April monthly average for U.S. crude exports is 850,000 bpd, just below the record-high monthly average set in February at 858,000 bpd.
Since the crude export ban was lifted in January 2016, volumes have increased from 245,000 bpd that month. So far in 2017, exports are averaging 698,000 bpd, compared to 230,000 bpd for 2016, as current pricing has attracted foreign interest.
Total U.S. exports reached 1.152mn bpd for week ending April 21, according to Energy Information Administration (EIA) data published April 26. The export level was just shy of the record high of 1.211mn bpd reached week ending February 21, according to the EIA data set, which includes condensates and diluents and exports by pipeline. For a measure on the level of pipeline exports, January exports of crude oil from PADD 2 were 200,000 bpd, according to the EIA.
Crude Exports Destinations
The largest portion of the exports from the United States for week ending April 21 were bound for East Asia. With 3.01mn bbls on two ships, it was a record weekly high, and followed four weeks without any ships leaving the United States bound for that region.
Refiners in the Caribbean were set to take in 2.42mn bbls of crude aboard three cargoes that exported week ending April 21, up from 1.99mn bbls the week before, and the highest point since week ending February 3. All three of the cargoes have landed at Caribbean docks.
Three exports totaling 1.822mn bbls loaded at Houston Fuel Oil Terminal Company’s facility in Houston, heading for Singapore, Rotterdam, and PetroJam’s 35,000 bpd refinery in Kingston, Jamaica.
Exports to Southeast Asia are averaging 117,000 bpd year-to-date, with cargoes shipping to Southeast Asia in seven of the 17 weeks so far this year. Two ships carrying 1.75mn bbls of crude headed to Singapore during the week ending April 21 and are the first following two weeks with no crude exported to the region.
Two exports carrying a total 1.943mn bbls loaded at Flint Hills’ Ingleside, TX, dock: one shipping to Kawasaki, Japan, and the other to North Atlantic’s 130,000 bpd refinery in Come By Chance, NL, Canada. One shipment loaded 597,000 bbls at Motiva’s Port Neches, TX, facility and is headed to the Caribbean; it is the second export from Beaumont-Nederland, TX, this year.
A cargo carrying 561,000 bbls loaded at Plains All American’s St. James, LA, terminal and exported to Cartagena, Colombia. That shipment is the seventh export this year to originate in St. James, pushing the total to 4.32mn bbls. Meanwhile, crude stocks at Plains’ St. James facility declined 885,000 bbls for week ending April 21.
Crude imports increased nearly 15mn bbls week-on-week
Similarly, waterborne crude imports spiked for week ending April 20, increasing 14.65mn bbls (2.09mn bpd) to 38.61mn bbls (5.52mn bpd), a 61 percent growth, Genscape data shows. The increase in imports was across all three coastal PADD districts, although PADD 3 had the largest week-on-week gain.
Waterborne imports into PADD 3 grew by 9.26mn bbls (1.32mn bpd) to 22.16mn bbls (3.17mn bpd) for the week ending April 20.
The surge in foreign imports into the United States is unlikely to abate in the near future, as crude currently on the water bound for domestic ports are averaging 5.835mn bpd for the week ending May 2, according to the latest Genscape forecast.
Implications of recent pricing trends on crude movements
The recent increase in exports and the high imports are primarily due to a relatively narrow spread between the Light Louisiana Sweet (LLS) and Mars cash differentials, according to market sources.
The spread between the NYMEX light sweet crude contract (WTI) and the ICE Brent contract is a directional indicator of waterborne crude flows. If WTI trades at a large enough discount to Brent, U.S. exports are incentivized. With limited light crude processing capacity in the U.S. Gulf Coast, and LLS and WTI prices under Brent, light sweet crudes are likely to be exported.
With strengthening Mars prices, other similar medium/heavy sour crudes become more desirable for U.S. Gulf Coast refineries, which typically process a heavier crude slate, and entice imports of similar quality crudes. Imports of heavy crude into PADD 3 increased 2.468mn bbls (353,000 bpd) to 4.319mn bbls (617,000 bpd) and accounted for 19 percent of the total imports for week ending April 20, up from 14 percent the week prior, Genscape data showed. Medium crude imports rose 6.459mn bbls (923,000 bpd) to 14.413mn bbls (2.059mn bpd) and increased their total portion of the waterborne imports to the region to 65 percent from 62 percent.
Serving as the benchmark for light sweet crudes in the U.S. Gulf Coast, the differential for LLS has been pressured while remaining relatively static this year due to an abundance of similar crudes produced domestically. LLS had been trading about $1.35/bbl to $1.75/bbl above WTI this year until mid-March, averaging about $1.65/bbl, according to Genscape weekly assessments. Following the fire at the Syncrude Upgrader on March 14, which provided a lift to all North American light sweet crudes, the LLS-WTI differential was assessed from $1.80/bbl to $2.25/bbl and averaged $1.98/bbl.
Mars, the benchmark for medium/heavy sour crudes on the Gulf Coast, has been trading around $3.20/bbl below LLS in recent months, with interest in the offshore crude coming from Asia, sources said.
On April 26, LLS was heard to trade at WTI plus $1.70/bbl while Mars exchanged hands at WTI minus $1.35/bbl, or $3.05/bbl below LLS.
With June pricing hovering around $3/bbl between the benchmark crudes, high exports from domestic ports and elevated levels of imports to the United States are likely to persist through at least the early part of the summer.
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