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.
Recommended Reading
Quantum Capital’s View on AI: Lots of Benefits, Pain Points
2024-05-16 - The energy industry is lagging in the race to implement AI, but Sebastian Gass, CTO of Quantum Capital Group, offered a few solutions during Hart Energy’s 2024 SUPER DUG Conference & Expo.
ProFrac, IWS Taking the Garbage Out of Oilfield Data Transfer
2024-07-16 - ProFrac and Intelligent Wellhead Systems’ MQTT protocol promises to speed up communications at the frac site, not only by saving costs but laying the foundation for future technological innovations and efficiencies in the field, the companies tell Hart Energy.
Exclusive: Cost-effective Benefits of Extracting from Mature Assets
2024-05-13 - Baker Hughes' well abandonment leader Bart Joppe details the importance of extracting resources from mature assets and the company's approach to managing a well, in this Hart Energy Exclusive interview.
Enverus Names Manuj Nikhanj as New CEO
2024-05-29 - Enverus President Manuj Nikhanj will take over as CEO of the top energy analytics firm on July 1, succeeding Jeff Hughes, who will continue as executive chairman.
Give Us a Signal: Tech Firm Ups E&P Coverage in Remote Plays
2024-07-02 - As E&Ps struggle to transmit information over public networks in out-of-the-way oil and gas basins, tech firm Digi is working to improve its reception.