A look at US crude and the crude products balance

April 29, 2019 By    

We are going to shift gears this week with Trader’s Corner. So far this year, our primary focus has been the imbalance in propane supply and demand, which is causing some softness in propane prices. The struggle for U.S. propane exports to keep up with surging production will remain the key topic this year. But this week, we are going to take a look at U.S. crude exports.

U.S. crude exports are a relatively new phenomenon. A law change from a few years ago allows U.S. companies to export crude oil. The reason for the change in policy was the United States had too much light crude and not enough heavy crude. The government opened crude exports to help balance the grades of crude around the world.

We thought it would be interesting to look at the U.S. crude and crude products balance since we hear a lot about U.S. energy independence, and we were curious to know which countries import our light crude.

Crude exports. Image: Cost Management Solutions

Click to enlarge. (Image: Cost Management Solutions)

For the week ending April 12, the U.S. Energy Information Administration reported the United States produced 12.1 million barrels per day (bpd) of crude. It exported 2.401 million bpd of that crude. Just like last year, the United States is setting new highs for crude exports with each passing week.

During that same week, U.S. refineries processed 16.078 million bpd of crude. The United States imported 5.992 million bpd to help offset the shortfall between our production and refinery demand. So why take on the expense of exporting crude only to have to import that much more to make up the difference?

As we said, it is all about crude grades. Too much of the U.S. production is light crude. Our refineries are designed to run heavier crudes. The United States is exporting light crude and importing heavy crude to provide what the refineries need.

During the week of April 12, the United States consumed 19.893 million bpd of petroleum products. Obviously, the output from our refineries is not nearly enough to meet total petroleum product demand. In addition to the crude, we imported 990,000 bpd of total gasoline, 278,000 bpd of jet fuel, 138,000 bpd of distillates, 121,000 bpd of propane and a million bpd of other petroleum products. In total, we imported 2.714 million bpd of total petroleum products to supplement what we refined for ourselves. From a petroleum products perspective, the United States is far from energy independent.

The table below shows the destinations of U.S. crude exports from August 2018 through January 2019 (the last month available).

U.S. Crude Exports by Destination Image: Cost Management Solutions

Click to enlarge. (Image: Cost Management Solutions)

Remember, the United States is exporting very light crude. Some of the countries getting our crude are primarily producers of heavy crude and need a source of light crude. Canada, for example, sends the United States a lot of heavy crude, and then we send it part of our surplus of light crude.

These are not all of the countries that have gotten U.S. crude, just the ones that have received loads during the six-month period. We have highlighted the top six importers of U.S. crude. Those six countries accounted for 69 percent of U.S. crude exports that shipped from August through January.

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