U.S. exports of light sweet crude to China jumped to a five-month high, as the world's biggest crude importer boosted refining and as Europe's demand eased, market participants said.

Cargoes of U.S. light sweet crude bound for China rose last month to about 187,000 bbl/d, the highest since August, said Matt Smith, lead oil analyst for the Americas at data and analytics firm Kpler.

Those exports are expected to tighten global supply of light sweet crude, while prices for WTI Midland, a key U.S. light sweet grade, have strengthened.

"China is continuing to pull more light sweet crude," said Vikas Dwivedi, global oil and gas strategist at financial services firm Macquarie Group. "WTI Midland is moving into Asia in bigger size."

Prices for WTI Midland are trading at an over $2/bbl premium to U.S. crude futures CLc1, traders said, the highest since Oct. 18.

Meanwhile, U.S.-linked grades are seeing a wider discount to the international benchmark Brent, encouraging foreign buyers to snap up U.S. crude. U.S. crude futures' discount to Brent widened to over $7/bbl this week, the most since Nov. 28.

A tight light sweet crude market is an indication that oil prices could go higher in the coming weeks, said Macquarie's Dwivedi.

U.S. exports to Asia are expected to continue expanding. Macquarie has forecast U.S. production to grow by roughly 900,000 bbl/d to December 2023 from December 2022, with as much as half of that production growth going toward exports to Asia.

U.S. oil production is expected to hit 12.4 MMbbl/d in 2023, according to the Energy Information Administration (EIA). Weekly U.S. crude exports rose to 4.7 MMbbl/d in the week to Jan. 20, highest since November, EIA data showed.

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