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US Crude Oil Exports Reached a New Record

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US crude oil exports

The EIA estimates that US crude oil exports increased by 597,000 bpd (barrels per day) to record high of 2,175,000 bpd on March 23–30, 2018. US crude oil exports increased by 1,600,000 bpd or 278% from a year ago.

US crude oil exports increased due to the rise in US oil production, a wider spread between Brent and WTI oil prices, and the crude oil export ban being lifted.

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Brent-WTI crude oil spread

The price difference between active Brent oil futures and WTI oil futures was at $5.23 per barrel on April 9, 2018. The price difference between Brent and WTI oil futures is called “the spread.” The spread was at $4.63 per barrel on April 2, 2018.

The widening Brent-WTI spread benefits oil refiners in the US. The VanEck Vectors Oil Refiners ETF (CRAK) aims to track the performance of the MVIS Global Oil Refiners Index. CRAK rose 0.21% to $30.14 on April 9, 2018, while the Brent-WTI spread was at $5.23 per barrel on the same day.

The United States Brent Oil ETF (BNO) and the United States Oil ETF (USO) aim to follow the performance of Brent and WTI oil futures, respectively. These funds rose more than 2% on April 9, 2018, while WTI and Brent oil prices rose more than 2% on the same day.

When the Brent-WTI spread drops, US oil producers’ relative disadvantage to international oil producers is reduced. When the spread narrows, it means that US oil producers selling in the US market are paid closer to international crude oil prices. When WTI oil prices trade higher than Brent, it’s an advantage for US oil producers compared to international oil producers. The last time WTI oil prices traded higher than Brent was in May 2016.

Impact 

The widening Brent-WTI spread and record US oil production could boost US crude oil exports. High US oil exports could support WTI and pressure Brent oil prices, which would cause the Brent-WTI spread to narrow.

Next, we’ll discuss some crude oil price forecasts.

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