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U.S. crude oil and condensate exports to Europe are expected to hit an all-time high of around 550,000 bpd in April, according to shipping programs, and traders expect the record pace to continue this year as U.S. oil is growing popular with European refiners, often at the expense of oil cargoes from OPEC nations and Russia.
According to trade flows monitor in Thomson Reuters Eikon, between January and April this year, U.S. crude oil and condensate exports to Europe jumped fourfold compared to the same period of 2017, to 68 large Aframax tankers.
While Europe was the destination of 7 percent of all U.S. oil exports in 2017, the percentage has increased to 12 percent this year, according to Reuters data.
The UK, Italy, and the Netherlands are top destinations in Europe, and BP, Exxon, and Valero have been importing large quantities of U.S. oil, traders told Reuters.
WTI, Light Louisiana Sweet, Eagle Ford, Bakken, and Mars are the most popular U.S. crude grades in Europe, as a growing number of European refiners have started to test U.S. crude and a wider WTI/Brent spread has been supportive of increased and cheaper U.S. oil supply into Europe compared to Russian, Nigerian, and other crude grades.
“U.S. oil is on offer everywhere,” according to a trader with a Mediterranean refiner who regularly buys Russian and Caspian Sea crude and has recently began buying U.S. oil.
“It puts local grades under a lot of pressure,” the trader told Reuters.
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The discount at which WTI trades relative to Brent has averaged $4.46 a barrel so far in 2018, which is roughly twice the discount we saw at this time last year, according to Reuters data.
This has made U.S. oil cheaper than Caspian Sea oil and even cheaper than North Sea Forties. According to Reuters, WTI cargoes were offered in Rotterdam, the Netherlands, at a premium of US$0.50-0.60 a barrel over Dated Brent, compared to the Forties’ premium of US$0.75 per barrel over Dated Brent.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
The US exported an estimated 550,000 barrels a day (b/d) to Europe in April 2018 compared with 3.6 million barrels a day (mbd) from Russia and an estimated 4.21 mbd from OPEC members.
Moreover, US WTI oil exports were aided by a discount averaging $4.46 a barrel relative to Brent crude. It is possible that without this discount, US exports would have been far less.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London