Leaving the light on

Jun 12, 2017 9:37:14 AM EST

As domestic production continues to roar back, the U.S. is importing light crude at an increasingly stronger pace. After light crude imports dipped to around 1 million barrels per day in early 2015 - as U.S. production peaked at 9.6mn bpd - imports have rebounded steadily since, while production waned through the latter half of 2015 and the first half of 2016.

But production has now turned around, and is now closing in on the highs it made in early 2015. Nonetheless, light crude imports continue to increase to U.S. shores. In fact, last month they clambered back above 2mn bpd for the first time since 2013:  

US light crude waterborne imports ClipperData.jpg

Light imports in May have been robust into all three coastal PADDs - the West, Gulf and Atlantic Coasts. On the aggregate, imports have jumped by a third on the prior month, led by a near 300,000 bpd increase into the US Gulf Coast. This strength is attributable to a ramp up in arrivals of Middle East light grades, and particularly of Arab Light and Basrah Light:

light crude into the US Gulf ClipperData.jpgNew Call-to-action

Another key driving force behind rising light crude imports last month has been receipts of North and West African crude, and particularly into the Atlantic Coast.

Imports from the two regions breached the 400,000 bpd mark in May, with North African deliveries of Libyan and Algerian crude accounting for 130,000 bpd. Nigerian grades accounted for the lion's share of West African barrels, with light sweet Agbami accounting for nearly a half of the Nigerian volume:      

North and West African crude into the Atlantic Coast ClipperData.jpg

The increase of flows into the U.S. has been driven by a surging supply side of the picture, as opposed to rampant demand for it. Rising volumes of light crude in the Atlantic Basin is pressuring regional pricing lower. This has encouraged bargain basement prices for this crude - at a level that U.S. refiners cannot refuse, despite rising domestic production.  

This recent higher availability of light crude comes amid rising total export loadings from North Africa and Northwest Europe, as well as returning flows from West Africa. Rising Libyan, Algerian and Egyptian exports have boosted North Africa flows, while mostly U.K. North Sea barrels have boosted Northwest European flows. 

All the while, West African exports (well, Nigerian exports) have struggled through the last year and a half amid geopolitical tension, but are finally back on par with early 2016 levels, also providing a boost to Atlantic Basin barrels.

With a third of June already through, Middle East deliveries of light crude are showing a material pullback. Nonetheless, North African, West African and NWE light crude deliveries are looking as strong as an ox.  

WAF NAF NWE loadings.jpg

About the Author

Matt Smith

deciphers and distills what is most relevant across the energy complex into cohesive and pithy knowledge you can use. The belly laugh is a bonus.

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