U.S. April oil exports top forecasts on Chinese demand

U.S. April oil exports top forecasts on Chinese demand

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HOUSTON — U.S. crude oil exports rose more-than-expected last month, building on a record 4.5 million barrels per day in March, as Chinese refiners snapped up cargoes to meet rising fuel demand, according to ship tracking data and analysts.

U.S. crude exports rose by 22% last year from 2021 after Russia’s invasion of Ukraine led the European Union, Britain, Canada and the U.S to ban imports of Russian oil and changed global flows.

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More recently, signs of an economic resurgence in China, the world’s second-largest oil consumer, have drawn cargoes from Russia and U.S. travel demand after the country rolled back its COVID-19 restrictions also boosted gasoline and jet fuel consumption.

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“Right now, we’re assuming April will average about 4 million barrels per day (bpd), but there is upside risk to that number,” said Jenna Delaney, head of North American crude at consultancy Energy Aspects.

April’s exports “have only been a few hundred thousand barrels per day less than March, which is very surprising,” said Rohit Rathod, a market analyst at Vortexa. “It was not expected that exports would remain above 4 million,” he said.

Favorable prices for U.S. crude compared to global benchmark Brent sent a flurry of cargoes abroad in April, a U.S.-based broker said.

U.S. crude traded at an average discount of $6.47 to Brent in February and was nearly $6 less in the first half of March. When the spread is wider than minus $6, foreign buyers have an incentive to buy more oil linked to U.S. crude.

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April exports to China were set to touch about 850,000 barrels per day, the highest since May 2020, Kpler and Refinitiv Eikon data showed, as exports to Europe and other Asian countries dropped. In March, U.S. exports to China hit their highest level in two and a half years.

Record March-April exports overall are unlikely to continue, analysts said. May U.S. exports will fall to about 3.78 million bpd in May, estimates Energy Aspects.

On Friday, the WTI-Brent discount narrowed to minus $3.21 a barrel, the smallest spread since June, a level that is likely to dampen U.S. exports in China in May.

Plunging Middle Eastern crude prices will sap demand for U.S. grades. Abu Dhabi’s Murban crude oil premium to Dubai, for example, declined last week to two-year lows, making it more economic for Asian refiners to process compared to U.S. crudes.

“Spreads show the (WTI-Brent) arb has closed,” said a U.S.-based trader, referring to a market dynamic that signals the price benefit of buying U.S. crude abroad.

(Reporting by Arathy Somasekhar in Houston and Stephanie Kelly in New York; additional reporting by Muyu Xu in Singapore; editing by Barbara Lewis)

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