US Oil Exports Eclipsed Imports for First Time Since 1973
December 6th, 2019
The energy market did close higher yesterday. Crude was up on the day but off its early highs and RBOB and ULSD but put in solid up days. Most of the upside today was due to the news that OPEC+ is going to cut an additional 500,000 bpd to the existing 1.2 million bpd oil output cut agreement. However, the 1.7 million bpd of oil cuts are now only expected to be for Q1 of 2020. There is no extension expected beyond March. In addition to no extension of the OPEC+ output cut agreement beyond March, Russia will be exempt from counting condensates in the output cuts. Condensate is a high value light type of crude oil extracted as a by product of natural gas. The market viewed this as really little to no cuts for Russia.
OPEC+ should make an official announcement today from Vienna with more details about the new output agreement and if there are any surprises it could impact pricing today.
Saudi Arabia made comments that they are growing tired of cutting more oil production than agreed to in the output cut agreement to make up for other producer countries not staying in compliance and producing more than agreed to. Saudi Arabia threated to increase oil production if other countries do not meet the oil put cut commitments.
The nonfarm payrolls were a big positive compared to expectations. The outlook was for 187,000 new jobs to be created in November and the actual number came in at 266,000. The unemployment rated went down to 3.5% from 3.6%, back to the 2019 low which matches the lowest level of unemployment since 1969. Equites jump on the news, but energy market are still down slightly.
Also getting positive China and US trade news this morning. Washington said they are confident of reaching a deal before the December 15 deadline from more tariffs. Chinese official say they are in close contact with their US counter parts on trade negotiations.
Saudi Aramco had priced its initial public offering at the top of its indictive range, making it the world’s largest floatation. Saudi Aramco’s shares have been priced at 32 riyals or $8.53 each against an earlier price range of 30-32 riyals per share.
This news was seen this week from the EIA. “In September 2019, the United States exported 89,000 barrels per day more petroleum (crude oil and petroleum products) than it imported, the first month this has happened since monthly record began in 1973. A decade ago, the Unites States was importing 10.0 million bpd more petroleum than it was exporting. Long-running changes in the US trade patterns for both crude oil and petroleum products have resulted in a steady decrease in overall US net petroleum imports.
US crude oil stocks showed their first draw in six weeks while Canadian crude supply hit record highs of 39 million barrels as of November 29th. A railroad strike and pipeline leak have led to additional problems of getting heavy Canadian crude out of the country while the Keystone pipeline remains running at reduced pressure.