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U.S. Refinery Products Are Taking The World By Storm

Total exports more than doubled since 2010; Canada drops from 92 percent of U.S. exports to 58 percent

Rising production from shale formations has fundamentally changed the U.S. petroleum products trade.

After being flat for many years, exports of both crude oil and refined products have doubled in the last six years, according to a note released today by the EIA.

(Click to enlarge)

U.S. crude oil traveling to new countries

The ban on exporting U.S. crude was lifted at the end of 2015, allowing U.S. crude to travel around the world to new markets. While Canada remains the U.S.’ primary crude export destination, its share has fallen sharply. In 2015, before the lifting of the ban, Canada received 92 percent of all U.S. crude oil exports. In 2016, by contrast, Canada received only 58 percent.

(Click to enlarge)

The Netherlands received the second-largest amount of exported crude, at 38,000 BOPD. Exports to other European nations like Italy, the UK and France made Europe the largest regional export destination.

The third largest destination overall is Curacao, a small island in the Caribbean. PDVSA, Venezuela’s NOC, operates a large refinery on the island with 330,000 BOPD of capacity. Press reports suggest that PDVSA is importing light U.S. crude to blend with heavy Venezuelan crude oil before processing at the refinery.

(Click to enlarge)

Corpus Christi is U.S. crude oil export hub; seeks to increase export capacity

Corpus Christi is the primary crude export hub in the U.S. According to Bloomberg, ships left the port carrying a total of around 22 million barrels of crude last quarter. This represents about 30 percent of the total crude exported by the U.S. in that quarter. Corpus Christi anticipates further need for exports, and is preparing for more activity.

The city recently received preliminary approval for a $350 million dredging project to deepen its channel. Currently, most ships transporting crude from Corpus Christi are Aframax-size vessels. These ships hold around 600,000 barrels of crude. The dredging project will allow Corpus Christi to handle Suezmax tankers which hold about 1 million barrels each.

(Click to enlarge) Related: Oil Industry To Waste Trillions As Peak Demand Looms

Refined products exports are now double imports

Exports of refined products surpassed imports of refined products in mid-2011, and have only grown since then. Today, the U.S. is exporting more than double its imports of refined products. Distillate fuels are the country’s primary petroleum product export, with an average of 1200 MBPD exported in 2016. Mexico is the main destination for U.S. distillate exports, but shipments of these products are much more evenly distributed than those of crude oil and gasoline.

(Click to enlarge)

(Click to enlarge)

U.S. gasoline fueling Mexico

U.S. exports of gasoline are currently averaging 761 MBPD, more than double the 335 MBOPD that was exported in 2010. Like distillate fuels, Mexico is the primary destination of American gasoline exports. Over the past five years, Mexico has accounted for 44 percent to 53 percent of all gasoline exported from the U.S.

(Click to enlarge) Related: Crisis-Stricken Venezuela Looks To Import Fuel

This share may continue to increase. Gasoline consumption in Mexico is rising, but Mexican refinery production is not keeping up with demand. According to the EIA, in fact, gasoline production from Mexican refineries fell by more than 100 MBPD in 2016. Mexican refineries often have difficulties producing clean fuels from the heavy sour crude primarily produced by the country. Outages in the second half of 2016 further compounded the problem.

(Click to enlarge)

Mexico has turned to U.S. refineries to make up the difference, and gasoline from U.S. refineries makes up a significant portion of total gasoline consumed by Mexico. According to EIA data, America provided more than half of Mexican gasoline consumed in multiple months of 2016.

(Click to enlarge)

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  • E Rosenberg on June 28 2017 said:
    This illustrates why traders' obsession with US inventory levels is so absurd. Obviously those levels do not drive prices. They are, rather, just a reflection of whether contango exceeds storage prices. Prices will ultimately be driven down by the increasingly clear surplus of supply over demand. The complex dynamic of imports, exports, refining and inventories plays out in the middle, between drilling and consumption, but is of short term significance at best.

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