Analysis: EIA Sees Distillate Exports Surge to Record High


   
Karim Bastati
DTN Analyst

   VIENNA (DTN) -- U.S. petroleum exports continued at a breakneck pace amid 
the ongoing supply disruption in the Persian Gulf, with diesel and heating oil 
exports last week jumping to their fastest on record, Energy Information 
Administration data showed Wednesday (5/6). Amid the surge in international 
demand, inventories have dwindled to a 20-year low.

   The closure of the Strait of Hormuz more than two months ago removed some 5 
million bpd of refined product supply, mostly middle distillates, from the 
market. It has also cut refiners dependent on Middle Eastern crude oil off at 
least 10 million bpd of inputs, forcing them to throttle operations and halt 
exports, thus widening the fuel supply-demand gap. Diesel and jet fuel were and 
continue to be the most impacted by the supply shock, with spot prices in Asia 
setting new record highs.

   Consumers globally have turned to U.S. refiners amid wide open arbitrage 
windows. According to EIA data, distillate fuel oil exports have soared from 
1.18 million bpd in mid-March to an unprecedented 1.86 million bpd in the week 
ending May 1. Over the past four weeks, they clocked in at more than 1.66 
million bpd, up 39% year-on-year and 71,000 bpd higher than the previous record 
four-week average set just the week before.

   International appetite for U.S. barrels was not limited to just diesel. Jet 
fuel exports soared to 427,000 bpd last week, just shy of the all-time high 
posted in early April, propelling total refined product exports to more than 
8.22 million bpd, smashing yet another record. Over the past four weeks, they 
were up 19% year-on-year, with jet fuel exports clocking in at nearly twice the 
rate seen in the same time span last year.

   The largest supply disruption in history has been testing U.S. oil export 
capacity. In the last full week of April, total petroleum exports including 
crude oil soared 1.3 million bpd past the previous all-time high to 14.18 
million bpd, and last week averaged just shy of 13 million bpd. In the last 
four weeks, the U.S. exported just under 13.2 million bpd of petroleum liquids, 
marking a 22% year-on-year increase.

   The global distillate supply deficit will likely continue to pull barrels 
onto the export market, straining already low inventories even more. Nationwide 
distillate fuel inventories just fell to a 20-year low 102.3 million bbl, down 
4% year-on-year and nearly 10% below the five-year seasonal average. While not 
yet at the minimum operational threshold, a continued depletion of stocks amid 
a surge in foreign bids is set to pressure prices at the pump higher.




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