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Crude Prices Tumble Exports Soar to a 15-year High

David Becker
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Crude Prices Tumble Exports Soar to a 15-year High

Crude oil prices moved lower to $102.70 per barrel on a WTI basis as news that exports outside of the United States grew to a 15-year high. To export crude oil from the United States, a company must obtain a license from the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce. Bans on exports started in 1973 following the energy crisis.

Almost all of the crude oil exported from the United States has been delivered to Canada, and most of the recent increase in crude oil exports has been from the U.S. Gulf Coast. Gulf Coast crude exports averaged 134,000 barrels per day in the first quarter of 2014, a 283% increase over 2013’s record high of 35,000 barrels per day. In the first quarter 2014, nearly 75% of Gulf Coast exports have left the region from the Houston-Galveston district, in Texas. This reflects the increasing production from Texas shale.

The United States exported 246,000 barrels per day barrels per day of crude oil in March 2014 the highest level of exports in 15 years . Exports have increased sharply since the start of 2013 and have exceeded 200,000 barrels a day in four of the last five months. The increase in crude exports is largely the result of rising U.S. crude production, which was 8.0 million barrels a day in February.

Despite strong demand for exports outside of the United States, demand for products domestically continues to remain robust. Total products demand over the last four-week period averaged 19.1 million barrels per day, up by 2.2% from the same period last year. Over the last four weeks, gasoline demand averaged 9.1 million barrels per day, up by 5.4% from the same period last year.

Distillate fuel demand averaged over 4.1 million barrels per day over the last four weeks, up by 8.6% from the same period last year.

As production continues to increase, export demand will drain crude oil from the US. If product demand remains robust, a crude squeeze could take place, pushing prices to multi-year highs.

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