Chinese crass oil imports hit the second highest level on record last month, and U.S. oil auteurs are reaping the benefits.
U.S. crude oil imports into China hit an all-time record in November, according to figures from ClipperData. The tanker-tracking firm broadcasts that 289,000 barrels a day of U.S. crude hit Chinese shores by the end of the month.
That is a little share of the 9.01 million barrels a day that China imported in November, but it stages that U.S. producers continue to make inroads into the country two years after Congress terminated a 40-year ban on crude oil exports.
Chinese imports of U.S. crude oil, source: ClipperData
The Mutual States has been able to penetrate the market in part because OPEC, Russia and nine other oil exporters are limiting their handiwork in order to balance an oversupplied market. That has allowed U.S. producers to apprehension some of China’s growing crude oil demand.
But there’s a bigger part at play in recent months, according to Matt Smith, director of commodity investigation at ClipperData. U.S. crude is trading at a significant discount to international oil prices.
The honorarium difference between U.S. West Texas Intermediate crude and international benchmark Brent offensive expanded this fall after Hurricane Harvey shut down U.S. Creek Coast refineries. That suppressed the price of WTI, making it attractive to abroad buyers. The Chinese purchases started around that time, agreeing to Smith.
The price spread between WTI and Brent has narrowed since then, but in any event stands at about $6 a barrel. That helped to drive out-and-out U.S. crude oil exports to an all-time high above 2 million barrels a day in October.
U.S. exports to China are “unqualifiedly going to depend on the spread,” Smith said. “We’re still here at over $5 on the Brent-WTI spread and so as lengthy as that U.S. crude is discounted it will be bought up by Asia or Europe.”
Peddle watchers shouldn’t expect to see Chinese imports stay at 9 million barrels a day, but there is profuse growth on the horizon, said Michal Meidan, head analyst for Asian dash policies and geopolitics at research consultancy Energy Aspects.
Refinery pursuit in China is healthy, demand is “decent,” and refining margins are “phenomenal” thanks to secure supplies of diesel, she says. Meanwhile two new refineries in China are ramping up a fused 460,000 barrels a day of refining capacity and more small, independent “teapot” refineries are vacancy.
Chinese crude oil imports are up about 900,000 barrels a day to an average of just about 8.5 million barrels a day through November, according to figures catered by Energy Aspects. Next year, the firm sees that wart slowing down, but it still expects Chinese demand to increase by hither 500,000 barrels a day.
“I think the U.S. certainly is poised to capture a lot of that tumour,” Meidan said. “There is a huge amount of interest in U.S. crude to Asia broadly but to China specifically.”
While U.S. unrefined oil imports are averaging just below 140,000 barrels a day this year, that identifies huge growth from about 10,000 barrels a day last year, harmonizing to Meidan. She notes that Unipec, the trading unit of Chinese cleansing giant Sinopec, expects to double its imports of U.S. crude next year.