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What Might Impact US Oil Exports in the Coming Days?

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Updated

Brent-WTI spread

On April 22, Brent crude oil June futures settled ~$8.5 higher than the WTI crude oil June futures. On April 15, the spread was at ~$7.6.

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In the past four trading sessions, Brent crude oil June futures have risen 4%—compared to a rise of 3.1 percentage points in WTI or US crude oil June futures. During this period, the United States Brent Oil ETF (BNO) rose 3.9%—compared to a rise of 3.2 percentage points in the United States Oil ETF (USO). BNO tracks Brent crude oil futures, while USO tracks US crude oil futures.

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Factors that will impact US oil exports

The above chart shows the generally positive relationship between US crude oil exports and the Brent-WTI spread since December 2015. Exports seem to follow the Brent-WTI spread with a lag. When the US lifted the ban on US crude oil exports in December 2015, US crude oil production started rising. From December 2015 to the week ending on April 12, US crude oil production rose ~31.8% to 12.1 MMbpd (million barrels per day).

In the same week, US crude oil exports rose by ~0.05 MMbpd from an 11-week low to ~2.4 MMbpd. US crude oil exports rose by ~0.7 MMbpd year-over-year. The ongoing conflict in Libya and the US decision to end waivers widened the Brent-WTI spread. The rise in the spread might push US crude oil exports higher in the coming weeks.

On April 30, the EIA is scheduled to announce the Monthly Crude Oil Production figure. If the EIA reports a decline in the monthly oil production data like last month, the upside in the Brent-WTI might be capped.

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