Even though crude oil prices have been soft recently, crude oil production and exports from the U.S. continue to grow.
Crude oil on the New York Mercantile Exchange closed at $52.64 Wednesday another daily decline – the seventh consecutive – and down about $8 from several weeks ago following the bombing of an oil facility in Saudi Arabia.
The decline in price can be attributed to an anticipated slow down in economic growth signaled by recent data regarding manufacturing, which has triggered a decline of almost 1,000 points on the DOW industrial average last week. The trade tension between U.S and China has added to the negative views of the economy.
Add in increased crude oil production around the world, and you have a recipe for softer oil prices.
U.S. oil production continues to increase finding new markets around the world.
The Energy Information Administration (EIA) reports exports of crude oil increased to an average of 2.9 million barrels per day (b/d), an increase of 966,000 b/d from the first half of 2018. Also in the first half of 2019, U.S. crude oil exports set a new record-high monthly average of 3.2 million b/d in June.
The number of U.S. crude oil export destinations also continued to grow, and now exceeds the number of U.S. crude oil import sources, EIA said.
Asia was the largest regional destination for U.S. crude oil exports—1.3 million b/d in the first half of 2019—followed by destinations in Western Europe, which received 824,000 b/d. U.S. crude oil exports to North America, which almost exclusively go to Canada (the largest single destination for U.S. crude oil exports globally) did not change much from the first half of 2018 to the first half of 2019, averaging 458,000 b/d.
U.S. crude oil exports to Asia grew significantly in the first half of 2019, up 472,000 b/d (58%) compared with the same period in 2018, despite a large decrease in exports to China. U.S. crude oil exports to China in the first half of 2019 averaged 248,000 b/d (64%) less than the same period last year. This decrease largely reflects continuing trends from the second half of last year when U.S. crude oil exports to China decreased significantly.
Increased U.S. crude oil exports to other destinations in Asia offset the drop in volumes to China. U.S. crude oil exports to South Korea increased 278,000 b/d (246%), exports to India increased 154,000 b/d (114%), and exports to Taiwan increased 109,000 b/d (133%) in the first half of 2019 compared with the first half of 2018.
U.S. crude oil exports to Western Europe also increased 327,000 b/d (66%) during this time. First-half 2019 exports to the Netherlands increased 173,000 b/d (192%) and exports to the United Kingdom increased 74,000 b/d (53%) compared with first half 2018, EIA said.
Increasing U.S. crude oil production has both reduced crude oil imports and increased crude oil exports.
Alex Mills is the former President of the Texas Alliance of Energy Producers.