September to see record US crude exports

Aug 26 2016

US crude exports are forecast to grow to a record in September, as oil traders take advantage of a widening price differential between the Brent and West Texas Intermediate (WTI) benchmarks and cheap transportation costs.

According to a report from Bloomberg, for example, Trafigura planned to move 5-7 mill barrels of crude from the US to Europe this month and next, with the bulk of the cargoes loading in September, Ben Luckock, the company’s global head of crude oil trading, said in an e-mail to the news agency.

Most of the crude will be Eagle Ford or Midland from Texas or US sweet blends, he said.

Trafigura has chartered three vessels to ship about 2 mill barrels of crude to Europe from Texas and Louisiana, according shipping sources. Two are Aframaxes, while third is a Suezmax.

“We believe September will be a new record month for US crude oil exports,” Luckock said in the e-mail to Bloomberg. “Trafigura is moving in excess of 10 Aframax-size parcels of US domestic crude oil to Europe loading across August and September, with the majority in September.”

The 2008-built Aframax ‘Ace’ is expected to arrive at Rotterdam on 6th September after loading from Buckeye Partners’ terminal in Corpus Christi, Texas, according to ship tracking data compiled by Bloomberg. The 2006-built Suezmax ‘Minerva Symphony’ is estimated to arrive at Milford Haven in the UKon about 7^th September. She loaded at the Enterprise Oiltanking terminal in Houston. A third vessel, the 2005-built Aframax ‘Adygeya’, is heading for the oil terminal in St. James, Louisiana, based on Bloomberg data. Its destination is unknown.

“Shipping US crude to Rotterdam would cost about 80 cents a barrel on board a Suezmax,” said Stefanos Kazantis, senior shipping and finance adviser at shipbrokers McQuilling Partners in New York, speaking with Bloomberg. “Given the overall weakness in the crude tanker markets over the last month, we estimate that the same cargo would have cost charterers anywhere from 20-30% more in July.”

US crude exports climbed to a record 20.5 mill barrels in May, the latest month for which the US Energy Information Administration (EIA) has released figures.

WTI’s discount to Brent widened 11 cents last Tuesday to $1.86 per barrel. It reached $2.33 on 17^th August, the steepest discount since December last year, Bloomberg said.

“This arbitrage has been facilitated by our significant logistics infrastructure and large customer base combined with low freight rates and weak WTI/Brent,” Trafigura’s Luckock confirmed.