WASHINGTON: The US government abolished 40-year-old constraints on crude oil exports in December. But since then less US oil has been put on ships headed abroad.
Volumes of US crude exported by tanker have declined 5 per cent in 2016 to an average 325,000 barrels a day, according to Clipper Data, a market intelligence service. Waterborne exports were 342,000 b/d in the first three months of 2015.
The oil industry hailed the ability to freely trade US crude as the dawn of a new era in global energy. The data so far suggest a big net addition to supplies will be slow in coming, however.
The US was already sending hundreds of thousands of barrels per day to Canada before the broad export ban was lifted. The Canada trade has become less profitable this year and exports elsewhere have yet to make up the difference.
Abudi Zein, Clipper Data’s chief executive, said: “Lifting the export ban has firmly tied the US into the global market but the world wasn’t waiting for US crude.”
As US lawmakers debated the oil export law, Line 9B, a Canadian pipeline, was reversed in December so crude could flow over land from west to east. Line 9B will eventually carry as much as 300,000 b/d to Quebec province, diminishing Canada’s demand for oil imported by tanker.
Steven Williams, chief executive of Canada’s Suncor Energy, told analysts last month: “We now have the ability to supply our Montreal refinery with a full slate of inland crude.”
US West Texas Intermediate crude dropped 2.5 per cent to $40.39 a barrel on Wednesday, while the international marker Brent was down 2.3 per cent to $40.84. Sandy Fielden, director of energy analytics at RBN Energy, said with benchmark oil prices in line and US production in retreat, “it’s not like there’s a flood of crude waiting to get shipped out”.
US crude oil imports are up 8.6 per cent this year to meet strong demand from domestic refineries. Last week’s volume of 8.4m b/d was the most since June 2013, the government reported.
The first unlicensed US crude exports left Corpus Christi, Texas, on December 31 2015 aboard the Theo T, a vessel bound for France. Including that cargo, US waterborne crude exports have still been lower this year than last, according to Clipper Data.
The shipment kicked off a nascent trade in US crude to several countries.
Enterprise Products Partners, a US energy logistics group, said this week that exports of crude oil and condensate through its docks would rise 54 per cent to 103,000 b/d in the first quarter. Trading houses have found ways to make export economics work by blending crude or taking advantage of a market structure in which oil fetches a higher price when it is delivered than when it is bought.
But exports of crude oil from the US east coast, through terminals such as those in Albany, New York, have tapered off, Mr Zein said.
