Analysis: EIA Sees Exports at 4-Mo High Amid Supply Crunch


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   VIENNA (DTN) -- U.S. crude oil and product exports combined soared to their 
highest levels last week since mid-December, underscoring the prolific rise in 
international demand for energy products out of the United States as refiners 
and consumers worldwide scramble to replace shut-in supply from the Middle East 
and curbed production out of Asia.

   The export surge during the week ended April 3 was particularly pronounced 
in refined products, which set one of the fastest paces on record. Over the 
past four weeks, U.S. product exports averaged more than 7.46 million bpd, up 
12% year-on-year, a pace only rivaled by the surge seen last December, 
according to EIA data released Wednesday (4/8).

   In the four weeks preceding the start of the U.S.-Israeli war on Iran and 
the closure of the Strait of Hormuz, product exports averaged less than 6.81 
million bpd.

   With the outbreak of the war on February 27, international buyers turned to 
U.S. refiners to fill the gap in middle distillates and blending components. 
Distillate fuel oil exports clocked in at the fastest pace in 19 weeks at close 
to 1.58 million bpd last week. On the four-week average, they were 12% higher 
than in the same period last year.

   Exports of other oils, which include light liquids from natural gas 
processing, condensates not classified as crude oil, unfinished oils, and a 
slew of fuel blending components, stood at 2.73 million bpd over the past four 
weeks, marking a more than 16% year-on-year increase.

   U.S. crude exports rebounded from a two-week lull, averaging just shy of 
4.15 million bpd, and up 628,000 bpd week-on-week. WTI's steep discount to 
Brent in March likely led to a surge in cargo bookings, which will show up in 
export data in the next few weeks. This, in combination with high demand for 
refined products, may push total petroleum exports to new heights in the weeks 
to come. Storage capacity at export ports and pipeline capacity transporting 
crude oil to terminals will likely be the limiting factors.

   The arbitrage window for crude has since narrowed, but the one for clean 
cargo shipments to Asia and Europe stays wide open. The two-week ceasefire 
between the U.S. and Iran may lead to a resumption of crude oil flows from the 
Persian Gulf, but it will take weeks for global refined product supply to 
normalize once traffic through the Strait of Hormuz is back to business as 
usual.




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