US crude exports fell in June, China top buyer: Update

Adds details on US-China trade relations; NuStar and Enterprise exports

US crude exports in June fell for the fourth straight month as efforts to combat the Covid-19 pandemic slashed global demand. China was the top buyer.

Total US crude exports averaged 2.75mn b/d in June, down from 2.93mn b/d in May, according to trade data released today by the US Census Bureau. The June total was down from 3.16mn b/d a year earlier.

China was the top destination for the second consecutive month with about 657,000 b/d, but that total was down significantly from the record 1.26mn b/d of US crude headed to China in May.

US exports to China have been volatile this year. The record high 1.26mn b/d in May was up from just 114,000 b/d in April, 108,000 b/d in March and zero in January and February.

Exports to China were expected to start ramping up at the start of this year after Beijing and Washington signed an interim trade deal that included commitments to purchase US energy products. But the timeline was delayed by the coronavirus outbreak which caused many refiners in Shandong province to slash run rates because of travel restrictions. Fuel demand now is recovering in China.

Meanwhile, Beijing is hoping Washington will agree to a hold a new round of trade talks as early as next week to affirm progress on the interim trade deal even as bilateral relations worsen on other fronts.

US president Donald Trump once dubbed the agreement a 'Phase One' deal that would eventually pave the way for a more comprehensive agreement in his second term. But the two countries, instead, are taking steps to decouple their economies.

President Xi Jinping told Chinese business leaders last month to concentrate their efforts "on doing our own affairs," making full use of China's massive domestic market. And Washington is working to curb Chinese companies' access to US capital markets and research institutions and to deny Chinese technology firms a foothold in the US and other economies. The latest step in this direction involves a White House threat to ban Chinese social media platform TikTok from the US unless its owners sell equity and cede operational control to a US company.

India was the second top destination for US crude in June at about 352,000 b/d, and Canada was third with 311,000 b/d.

US crude exports had been on an upswing late last year and into 2020 after new pipelines went into service moving Permian crude to the Gulf coast. But the market has been upended as some traders struggled to place cargoes in a saturated global market.

Exports seem to be recovering from sharp declines in the second quarter, according to US midstream companies. NuStar Energy said yesterday that volumes at its crude export terminal in Corpus Christi, Texas, are rebounding after dropping by more than 60pc in May. And Enterprise Products Partners reported a "pickup" in US crude exports with some demand shifting to a lighter slate of oil.

Since the US lifted 40-year-old restrictions on most oil exports in December 2015, US crude — primarily light crude — has been exported to countries around the globe.

For the full year of 2019, US crude exports averaged 2.98mn b/d, an annual record.

The monthly trade data comprises several categories of oil, including crude under 25°API, crude that is 25°API or higher, and condensate derived wholly from natural gas.

By Eunice Bridges