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With US crude oil production having reached new record highs,
close to 13 million b/d, according to the Energy Information
Administration (EIA), the big question is the direction of future
flows from the country, with some major importers starting to
express their appetite for more US barrels. The country's
production is estimated to average around 13.3 million b/d this
year, which would allow the US to further strengthen its position
among major crude oil exporters.
According to IHS Markit Commodities at Sea,
which has been providing live data on US crude oil shipments with
accuracy above 98% against EIA's official data since early 2017,
the country's exports from PADD 3 (US Gulf Coast) has surpassed
three million b/d.
Meanwhile, EIA has raised its 2020 forecasts for West Texas
Intermediate (WTI) crude oil prices to USD 59.25 a barrel. The
sentiment across the global oil market has improved lately, with
oil futures moving higher, driven by expectations that US
relationships with other countries will improve. The US Senate has
approved the US-Mexico-Canada trade agreement, while a trade deal
was signed last week between Washington and Beijing, providing
optimism that global energy demand growth could be much healthier
than earlier anticipated.
There seems to have been a revival in the US crude oil trade
flows to China since late Q2 2019, as shown by IHS Markit Commodities at Sea
data, with last month's shipments having surpassed 310,000 b/d for
the first time since February 2018. Loadings in January have been
moving lower so far, closer to 200,000 b/d, but the activity is
believed to be affected by the approaching Chinese New Year as
well. China is expected to further increase its purchases of US
crude oil after the Phase 1 deal Washington and Beijing signed.
With China's oil imports at a new record high, a healthier trade
relation with the US would only benefit the country providing
access to one of the world's biggest crude oil exporters.
Posted 20 January 2020 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime, Trade & Supply Chain, S&P Global Market Intelligence
