Exports of crude oil from U.S. shores jumped in June to the highest since the 1950s, according to U.S. data, topping OPEC member Ecuador in supplying global markets and underscoring the dramatic shift in global flows. Exports jumped 35 percent from May to 389,000 barrels per day in June, almost all of that sent to Canada,
according to data from the U.S. Census Bureau released on Wednesday. That's more than Ecuador, the smallest producer in the Organization of the Petroleum Exporting Countries with overseas sales of some 354,000 bpd in 2012, according to government data. The June surge of more than 100,000 bpd is the biggest monthly rise since the onset of the U.S. shale oil revolution, which has unlocked billions of barrels of reserves and fueled a production boom that has the potential to exceed domestic demand. The rise shows that U.S. crude from places such as North Dakota and Texas is finding more buyers in Canada, particularly on the Atlantic Coast where refiners are still dependent on costlier Brent-linked crude from the North Sea or West Africa. Although a decades-old U.S. law generally bars exports of domestically produced crude, shipments to Canada are broadly allowed, as are re-exports of foreign oil. But a growing excess of particularly light crude is prompting companies to find ways around the ban, including by lightly processing a super-light form of oil known as condensate in order to get around restrictions on raw crude. The first such cargo sailed from Texas bound for east Asia in late July . The rise in exports may level out soon due to congestion on U.S. railway lines that now handle a tenth of U.S. oil production, according to Dr. Philip K. Verleger, Jr., president of consultancy PKVerleger LLC. Some of North Dakota's Bakken oil is sent by rail thousands of miles to the Canadian east coast. "Export figures will probably slow down in the fall because the railroads are going to run into a capacity problem," he said. "When the fall comes, agriculture (shipments) will get priority and the pressure is on for the railroads to move ag and sidetrack oil. Suddenly, exports will plateau."
SINGAPORE AND SWITZERLAND TOO
The Customs data showed 6,000 bpd went to Singapore and 5,000 bpd to Switzerland. These cargoes were likely re-exports, probably of Canadian oil, market sources say. Small-scale exports to Switzerland first emerged in April. The shipments to Singapore, classified as under 25 degrees API, also known as heavy crude, appeared to be the first on record. June is the first month that exports have leapfrogged above their previous recent peak in the 1970s. They hit their highest since April 1957, in the aftermath of the Suez Crisis when the nationalization of the canal caused the United States to increase crude shipments to Europe. Despite the June increase, the United States remains a large net importer of crude, buying some 7.5 million bpd over the past week. Many refiners are geared to run heavier, sour crudes from abroad, while others lack easy access to shale oil. Exports under the exemptions need to be approved by the Commerce Department's Bureau of Industry and Security. The Census data is published weeks earlier than closely watched Energy Information Administration (EIA) trade figures, which are based in large part on the Census. Since 2012, the monthly Customs figures are identical to the EIA's data with the exception of four months, according to a Reuters analysis. The EIA could not immediately comment on the discrepancies. Export data from the Census Bureau is gathered electronically where exporters are required to fill out declaration forms when cargo worth more than $2,500 in value leaves U.S. shores, a spokeswoman said. It combines both domestically-produced and re-exported crude oil. The EIA's export data also includes re-exported oil. However, it was not immediately clear how the EIA defines crude oil in its monthly export data, which could be a reason for the slight variation.
barrels per day June 2014* May 2014**
Canada 378,000 263,000
Singapore 6,000 0
Switzerland 5,000 8,000
Spain 0 17,000
TOTAL 389,000 288,000
* Indicates Census Bureau data ** Indicates U.S. Energy Information Administration