Rebound in flows to Asia supports US crude exports over 5 million b/d

US crude exports over the week ended July 28 topped the 5 million b/d mark as a rebound in flows to Asia supported exports, while Europe continues to pull robust volumes from the US Gulf Coast, US Energy Information Administration data showed Aug. 2.

US crude exports averaged 5.283 million b/d over the week ended July 28, up 692,000 b/d from the week prior, the EIA reported.

The strong export levels over the last two weeks reported in EIA data brought the four-week moving average for US crude exports to 3.958 million b/d.

The rebound in the weekly export level came as US crude exports to Asia rose to a three-month high of 2.061 million b/d, up 1.16 million b/d from the week prior, Kpler shipping data showed.

Flows to Europe, meanwhile, were estimated at 2.226 million b/d, Kpler data showed, down 396,920 b/d from the week prior. In total, Kpler estimated US waterborne crude exports last week at 4.922 million b/d.

Export figures from ship tracking platforms like Kpler can differ from the US EIA reported figure for two important reasons. Firstly, the Kpler figure represents just waterborne crude exports, with pipeline flows to Canada not counted, and secondly, platforms like Kpler track actual vessel movements in and out of ports, while the EIA relies on customs receipts to calculate their export figure.

Despite lower on the week, US crude flows to Europe remained robust over the second half of July as strong demand for US barrels in Europe, and the need for US exporters to place excess light sweet barrels not consumed in the domestic refinery diet into the international market has provided support. Indeed, despite recent refinery expansions to increase runs of light sweet crude grades in the US, like the 250,000 b/d expansion at ExxonMobil's Beaumont, Texas, refinery, the US still produces more light sweet barrels than refiners can consume, causing the export market to be an important outlet.

VLCC usage grows

Notably, a larger share of US exports has been placed on Very Large Crude Carriers, tankers that are capable of transporting over 2 million barrels. Over the week ended July 28, 1.612 million b/d of US crude exports were shipped on VLCCs, Kpler data showed, marking the highest share of weekly exports on VLCCs since the week ended April 28, and third highest weekly share of export volumes ever recorded.

Through the first seven months of 2023, US export volumes on VLCCs averaged 1.048 million b/d, compared to an average of 586,066 b/d in 2022, and just 396,062 b/d averaged in 2021. The larger vessel sizes can allow more economical shipments particularly when rates for smaller classes like Aframaxes or Suezmaxes rise.

The jump in VLCC usage has been particularly notable in US exports to Europe. Over the first seven months of 2023, US crude exports to Europe on VLCCs averaged 329,373 b/d, nearly triple the average in 2022 of 115,267 b/d and sharply higher than the just 5,499 b/d of US crude exports to Europe on VLCCs averaged in 2021.

US crude exports on VLCCs saw another important milestone met in July when the Port of Corpus Christi, Texas, announced the completion of phase 2 of its four-phase channel improvement project – an effort to both widen and deepen the Corpus Christi ship channel to allow larger tankers to load.

The completion of phase 2 deepened the draft at Ingleside – the area at the Northern mouth of the port – allowing for VLCCs to partially load up to 1.5 million-1.6 million barrels at two of the Ingleside terminals: the Enbridge Ingleside Energy Center and the South Texas Gateway. Previously, VLCCs could load to just 1.2 million barrels at the Enbridge Ingleside Energy Center and South Texas Gateway terminals.

Currently, the only port in the US Gulf that can fully load a VLCC is the Louisiana Offshore Oil Port, which sits about 18 miles offshore Louisiana.