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US Crude Oil Exports Might Rise to a Record Level

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Brent-WTI spread

On May 24, Brent crude oil active futures settled ~$10.06 higher than the WTI crude oil active futures. On May 17, the spread was at ~$9.29.

In the past five trading sessions, Brent crude oil July futures have fallen 4.9%—1.9 percentage points less than the rise in WTI or US crude oil July futures’ fall. During this period, the United States Brent Oil ETF (BNO) fell 4.7%—1.8 percentage points more than the fall 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 could 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 May 17, US crude oil production rose ~32.9% to 12.2 MMbpd (million barrels per day).

In the same week, US crude oil exports fell by ~0.425 MMbpd to ~2.922 MMbpd. US crude oil exports rose by ~1.17 MMbpd year-over-year. The ongoing proxy war between Saudi Arabia and Iran after the US decision to end waivers widened the Brent-WTI spread. On May 24, the Brent-WTI spread rose to ~$10.06—the widest level since February 21. In the week ending February 15, US oil exports rose to the highest level of 3.6 MMbpd. If US weekly oil production data continue to increase, the spread might expand and we could see US oil exports at a new record level.

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