US crude exports are ramping up due to increasing demand from Asia and Europe and recovering U.S. production from the lows of the coronavirus pandemic.
Surging worldwide demand, supply outages and international political tension have stoked worries around crude supplies, boosting oil prices to the highest levels in seven years, with some predicting crude could even reach $100 per barrel. That has brought in more buyers of U.S. oil, increasing exports and decreasing domestic crude stockpiles. read more
U.S. seaborne crude exports have increased in recent weeks and are close to 3 million barrels per day so far this month, according to Matt Smith, lead oil analyst for the Americas at Kpler. That's just under the 3.2 million bpd average in crude exports in December, which was the strongest month since February 2020, he said.
Cargoes booked for February are headed to numerous countries including China, South Korea and India, Refinitiv Eikon shipping data showed. Those three are among the largest regular buyers of U.S. crude. Global demand in Asia in 2022 is expected to rise 4% to 37.2 million bpd, the International Energy Agency said Thursday, making it the only major region ahead of 2019's pace.
"The exports are underpinning the market now," said John Kilduff, a partner at Again Capital Management in New York. "I expect the 3 million-per-day number to sort of become the norm."
Exports have helped reduce crude stockpiles in the U.S. Gulf Coast to as low as 220.3 million barrels earlier this month, which was a two-year low.
Increased vehicle traffic means lighter barrels from the United States, which produce a higher volume of gasoline, are attractive to buyers. The IEA said Thursday it expects worldwide gasoline demand to rebound to 26.3 million bpd - just 1% lower than 2019's consumption. read more
Supply hiccups from countries like Libya, which had temporary production outages starting in December, shifted U.S. exports to countries in Europe. read more
In December, the United States shipped around 2.3 million barrels of crude to Italy, Refinitiv Eikon data showed, up from 1.6 million in November.
"Everyone is seeing really strong demand growth numbers for this year, and when you look at where supply growth is coming through from, the U.S. is a leader there," Smith said.
Crude output from major U.S. shale formations is due to rise to 8.54 million bpd in February, the highest since March 2020, according to the Energy Information Administration. Of that, the Permian Basin's output is set to reach 5.1 million bpd, also a record.