Viewpoint: USGC products exports to rise despite virus

US Gulf coast (USGC) motor fuel exports increased in 2021 and may continue rising in 2022 if Covid-19 lockdowns continue to be lifted and the highly-contagious Omicron variant proves to be less severe than previous variants.

In 2021, waterborne gasoline and diesel loadings out of the US Gulf coast averaged 1.40mn b/d, according to estimates from Vortexa. Full-year 2021 exports were almost 5pc higher than in 2020, when estimates averaged 1.34mn b/d.

Exports out of the Gulf coast rose steadily over the past 12 months, peaking at 1.96mn b/d in December, the highest monthly estimate since before the Covid-19 pandemic reduced worldwide motor fuel demand.

The last time monthly US Gulf coast exports exceeded 1.96mn b/d was in April 2018, when Vortexa estimated they averaged 1.97mn b/d.

Quarterly motor fuel waterborne loadings out of the US Gulf coast have steadily risen as well, averaging 1.09mn b/d during the first quarter of 2021, 1.38mn b/d during the second quarter, 1.43mn b/d during the third quarter and 1.68mn b/d during the fourth quarter.

Total fourth quarter 2021 US Gulf coast waterborne loadings were 26pc higher in yearly comparison and 0.6pc higher than estimates from the same three-month period in 2019.

Monthly US gasoline exports reached record highs in May, June and July of 2021, reflecting a departure from the historical seasonality of gasoline exports in the summer months, according to the Energy Information Administration (EIA). Mexico accounted for much of this increase, the result of an outage at Pemex's 285,000 b/d Minatitlan refinery from 7 April-10 May.

Demand may continue ticking higher if Omicron turns out to be less severe. US president Joe Biden on 27 December said the variant should not be viewed as a "source of panic," in part because vaccinated people face less risk of severe illness or hospitalization if they are infected. That same day, the US Centers for Disease Control (CDC) shortened its recommended isolation period for asymptomatic individuals, a potential boon for fuel demand. Also, the new variant of Covid-19 notwithstanding, most countries have not enacted further movement restriction controls, which has injected some confidence into the near-term demand outlook.

In its latest Short-Term Energy Outlook (STEO), the EIA forecasts that 100.5mn b/d of petroleum and liquid fuels will be consumed globally in 2022, up by 3.5mn b/d from its 2021 estimate, further supporting export demand.

Waterborne loadings out of the US Gulf coast fell to a low of 700,800 b/d in May 2020, when the World Health Organization (WHO) declared Latin America — the primary destination for the region's exports — the epicenter of the pandemic. Since then, monthly US Gulf coast exports averages have fallen below 1mn b/d only once, in February 2021 when they averaged 911,200 b/d.

US Gulf coast motor fuel exports rose in December by 44pc from a year earlier, largely due to increased demand from Mexico during the country's busy driving season. December's daily export average was also 13pc higher than two years earlier and 19pc higher than December 2018, indicating driving demand has more than recovered from slumps experienced during the height of the pandemic.

Mexico accounted for much of the increased US export demand in 2021, importing an average of 435,500 b/d, up by more than 20pc from 2020's average of 360,500 b/d, according to Vortexa data.

Mexico's estimated imports in 2021 were 9.4pc lower than 2019 levels, but US Gulf coast waterborne loadings reached a 44-month high in December. That trend, coupled with reassurances from the US government, shorter suggested Covid-19 isolation periods and an absence of movement restrictions abroad all point toward export demand continuing to move higher.

By Matthew Keever