By Arathy Somasekhar
HOUSTON, March 20 (Reuters) – US crude oil exports to Europe so far this month have averaged a record 2.1 million barrels per day, amid sharp discounts to the global benchmark and weaker oil demand from US refiners was inspired.
Record exports to Europe and China this month reflect the rise of the United States in the crude oil trade, cementing its role in supplying Europe following Russia’s invasion of Ukraine.
A holiday shutdown halted operations at a dozen US refiners, increased scheduled plant maintenance and reduced crude demand, widening US crude’s discount to benchmark Brent.
The refinery’s slowdown weighed on US West Texas Intermediate oil prices, while Brent was helped by declining Russian barrel availability as well as complications with Norway’s Johan Sverdrup flows, Kpler analyst Matt Smith said.
The West Texas Intermediate/Brent spread widened to more than $7 in late January, its steepest discount so far this year, prompting a flurry of trades as a wider spread makes US oil cheaper for foreign buyers.
Quantities of crude oil bound for Europe being loaded onto very large crude oil vessels (VLCCs), which normally carry about 2 million barrels, are expected to hit a record high this month, according to Kpler data.
advantage virtuea VLCC chartered by BP and loaded in Corpus Christi, Texas on March 11 was headed to the UK and unloaded later this month, according to data from Refinitiv Eikon.
Front Altaanother VLCC chartered by Occidental Petroleum, was en route to Rotterdam, according to ship tracking from Refinitiv and Kpler.
Occidental declined to comment. BP declined to comment on the exports but pointed to its energy outlook He forecasts growth in US oil production for the remainder of this decade before declining and OPEC vying to increase its market share.
Export demand has supported prices for some top US crude grades. The median price for WTI Midland, which is tied to the top U.S. shale basin, is up nearly 50% quarter-to-date year to date, while East Houston WTI is up about 30%.
Exports should remain strong in the coming months as long as the Brent-WTI spread remains wide, Kpler’s Smith said.
While domestic demand will increase in the coming months as the refinery turnaround season ends and summer trips pick up, supply will also increase. U.S. shale producers have expanded supplies and the Biden administration is set to sell 26 million barrels of crude from the Strategic Petroleum Reserve under a Congressional clearance.
(Reporting by Arathy Somasekhar in Houston; Editing by Richard Chang)
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