US crude exports stablize after 2Q free fall: Update

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The downward curve in US crude exports as a result of the Covid-19 pandemic appears to be flattening out as production starts to recover from steep declines in the second quarter.

The US exported around 2.79mn b/d of crude in July and 2.64mn b/d so far in August, according to preliminary weekly estimates published by the US Energy Information Administration (EIA). This reflects outbound crude flows have stabilized near the 2.75mn b/d mark in June reported by the US Census Bureau in its latest available monthly statistics.

Outbound flows have fallen nearly 1mn b/d since the record high of 3.71mn b/d set in February to reflect a roughly 13pc drop year-on-year and the lowest US crude export volume since August 2019.

Exports had climbed throughout the fourth quarter of 2019 and early 2020 on the back of infrastructure projects at the US Gulf coast, primarily aimed at adding more than 2.5mn b/d of crude pipeline flows from the Permian basin to the growing Corpus Christi port district.

But the waterborne crude market has since contracted amid reduced buying from India and other key outlets in Asia-Pacific, while US production has fallen by more than 18pc from the record 13.1mn b/d achieved in late February to a two-year low of just 10.7mn b/d so far in August, according to weekly estimates by the EIA.

The latest monthly statistics by the EIA indicate US crude production fell by about 21.5pc from 12.755mn b/d in January to 10.001mn b/d in May.

The majority of those cuts were centered in onshore shale fields like the Permian basin in west Texas and New Mexico and the Bakken formation in North Dakota, leading exports to shift to more of a sour slate to compete with tighter Mideast Gulf supplies.

An estimated 6.68mn bl of US medium sour Mars was seen loading in July compared to about 4.8mn bl at the same time last year, according to an analysis of preliminary vesseltracking data.

Shipping fixture reports indicate at least one 2mn bl Mars cargo is expected to load at the Louisiana Offshore Oil Port (LOOP) in September while market participants also point to a rise in heavy sour Western Canadian Select (WCS) exports from the US Gulf coast.

At least one WCS cargo has sold so far during the September US trade month, and two more cargoes were heard on offer.

By Amanda Hilow