US weekly crude exports fell to their lowest level November last week, according to US Energy Information Administration oil data July 8, as arbitrage incentives to Northeast Asia have eroded.
The US exported just 2.39 million b/d of crude for the week ended July 3, their lowest since the 2.37 million b/d seen in early November. Exports last week were down more than 700,000 b/d from the week prior.
Arbitrage economics for WTI into Asia have been difficult to work. For example, WTI MEH delivered into Japan at a scant 14 cent/b discount to Russian ESPO in Japan over June, according to S&P Global Platts Analytics crude Arbflow data. As recently as April, economics favored WTI MEH by over $7/b. In fact, the data shows WTI MEH delivering at a small premium to ESPO at the start of this week.
Additionally, the closure of the Dakota Access Pipeline (DAPL), which has been ordered by a US Judge to be shut by Aug 5, would lower the volumes of light sweet crude available on the USGC, thus leading to higher values for sweet grades, like WTI MEH. Indeed, since the July 6 ruling, differentials for WTI MEH have risen by 20 cents/b while differentials for Light Louisiana Sweet crude have gained 70 cents/b.
First VLCC from US to Canada
While US exports have waned in recent months, the nascent US crude export market is still recording new firsts. The first VLCC exported from the US to Canada, the Eliza, is set to reach the Irving Oil Refinery in Saint John, New Brunswick on July 13, according to Kpler data. The vessel loaded at the Louisiana Offshore Oil Port on April 7, and spent some time floating in the USGC before moving towards its current destination, according to Kpler data.
The Irving Oil Refinery in Saint John can process around 320,000 b/d of crude oil, and more than half of the finished product is exports to the Northeast US, according to the company's website.
