At-the-pump gasoline and diesel prices are down from all-time highs, but they remain extremely high. Meanwhile, as local energy resources are sold to the highest bidder, more US-produced petroleum is being loaded into tankers going for Europe, and more US-refined diesel is being loaded onto ships bound for Latin America.
“Rising [diesel] export shipments have depleted domestic supply,” the Argus said on Monday.
According to Vortexa ship-movement statistics, diesel exports averaged 1.45 million barrels per day (b/d) from July 1-13, the highest level since July 2017.
Total clean product exports (including diesel, gasoline, jet fuel, and other goods) averaged 2.5 million b/d in the first half of July, according to Kpler data, one of the highest monthly averages since August 2019.
Refined items from the United States are making their way south.
According to Reid I’Anson, senior commodity analyst at Kpler, “on the clean product side of the ledger, exports are pretty well back in line with pre-pandemic levels, with the majority of these barrels ending up in Latin America, particularly Mexico.”
According to Argus, US diesel exports to South America are at their highest level in a half-decade.
Total US tanker exports, including crude, clean products, and dirty products (such as fuel oil), are estimated to be 5.95 million b/d months to date, up roughly 5% from May-June levels. The average for the first half of July is close to the all-time record of 6.1 million b/d set in December 2019.
As a result of the SPR release, increased domestic output, and “U.S. refineries already running flat out with utilization rates in the high-90 percent range,” Broekhuizen expects “the majority of the additional [non-SPR] barrels will hit the export market.”
He forecasts that US crude oil exports will climb by 1 million barrels per day or more over the next six months as the SPR release “turbocharges” exports even while the SPR petroleum itself is not shipped.
Restrictions on US refinery intake
“U.S. refinery intake has oscillated at 16.5 million-16.7 million b/d in recent months, in line with the five-year average but roughly 1.4 million b/d below its historical peak,” according to BRS. Given that 1.3 million b/d of US refining capacity was shut down between 2020 and 21, there is little chance that throughputs will climb higher this year.
“In fact, we expect that there will be more unplanned stoppages in the coming months, either as a result of hurricanes or because refineries are being driven so hard as a result of growing transport fuel crack spreads that difficulties emerge.”
Given domestic refining constraints, BRS anticipates US crude exports to climb further this summer, potentially reaching 4.5 million b/d by the end of the year. It forecasts that US oil exports will regularly exceed 5 million b/d next year and “sometimes exceed 5.5 million b/d” — and that “the US will be the major source of incremental crude tanker demand this year and beyond.”
