US To Be Net Exporter Of Crude Oil And Petroleum Products -- October 12, 2019

Updates

Later, 8:29 p.m. CT: this is pretty funny. I had second thoughts about posting the "original post" earlier this evening. I was writing about something I knew very little about and on top of that getting well ahead of my headlights. I was just about to put this post in draft / take it off the blog but I was "saved" by a very nice comment from a reader which I will bring up here for easier access. Once I post something, I do not like to pull it down except under very extenuating circumstances. I've discussed this "policy" before. So, a huge "thank you" for a reasonable response to this post. Here is the first comment, from a reader:

1. Be careful about comparing a weekly data point to monthly data. Weekly data of all kinds tends to have worse quality (i.e. more often wrong) and (even when correct) to be more subject to random variation.

2. Here is the annual refinery utilization, based on monthly data. You can click menu at top and look at monthly also. I prefer the annual view since there is a lot of variation even in the monthly data from seasonality and specific refinery maintenance. And then annual compares well to the time frame of the 2007 to present trend:
https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mopueus2&f=a

I think it mostly looks pretty stable, although maybe higher towards the end of the oil boom (~2014), versus 2008 time frame. And then pretty high in 2018 as well. But again, you just read too much into an isolated weekly or even monthly datum on refinery usage--it just "bounces" a lot.

3. Yes, we are definitely becoming a "merchant refiner" (i.e. importing crude and exporting products, like Singapore). This is mostly to Latin America (LATAM). Still pales in comparison to our internal use. But it's enough to be noticeable in world trade flows. Note: it's not just advantaged crude in the US that has allowed this. A lot of it is because of having advantaged natural gas (a significant operating expense in refinery budget).

4. Definitely we are exporting a fair amount of gasoline (and even more of diesel), from refineries. However, more than 50% of the "products" net exports (of ~3 MM bpd) is from NGLs (i.e. gas plants, not refineries).
https://www.eia.gov/dnav/pet/PET_MOVE_NETI_DC_NUS-Z00_MBBLPD_M.htm 

Original Post

 
Back to this post with these two graphs (same underlying graph, one with with a lot of clutter; one without):

I was surprised that no one spotted something very interesting, but it required connecting dots from two different sources.

The US will be a "net exporter of crude oil and petroleum products" next month.

A reminder about the word "net."

"Net" in this case means subtracting exports from imports or vice versa. In this case:

exports
- imports
_____________
more exports than imports.

Net exporter.

A reader reminded me this was not simply crude oil. If it were crude oil only, the US would still be a net importer of crude oil. Apparently it will take another 4 million bopd for the US to be a net exporter of crude oil.

The US will be a net exporter of crude oil and petroleum products. Petroleum products is the stuff that is, for the most part, produced at refineries. Some components qualify as petroleum products but don't require refining. At least that's how I understood it. I could be wrong.

But this is the point.

Petroleum products.

US is to be a net exporter.

One would think the refineries would be operating all-out to hit that record.

In fact, US refiners have been working well below their capacity for the past two to four weeks according to the EIA weekly petroleum report, around 86% when they routinely operate at 96 to 98 percent capacity.

Since I haven't seen anyone else comment on this I assume it doesn't mean anything but it sure seems interesting to me.

Something tells me "Focus On Fracking" will provide an answer this Sunday night.

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Natural Gas Injection

By the way, speaking of "Focus on Fracking."  From last week, October 6, 2019:

... the quantity of natural gas held in storage in the US last week increased by 112 billion cubic feet to 3,317 billion cubic feet, which meant our gas supplies were 16.3% more than the 2,852 billion cubic feet that were in storage on September 27th of last year, while still a half percent below the five-year average of 3,335 billion cubic feet of natural gas that have been in storage as of the 27th of September in recent years....

... this week's 112 billion cubic feet injection into US natural gas storage was a bit more than the forecast for an 109 billion cubic feet injection, while it was well above the average 82 billion cubic feet of natural gas that have been added to gas storage during the fourth week of September over the past 5 years, the 27th such average or above average storage build in the last 29 weeks...

... the 2,139 billion cubic feet of natural gas that have been added to storage over the 27 weeks of this year's injection season is the second most for the same period in the modern record, eclipsed only by the record 2204 billion cubic feet of natural gas that were injected into storage over the same 26 weeks of the 2014 natural gas injection season, a coolish summer when there were no injections below 76 billion cubic feet…. 

 
... as it turns out, that 112 billion cubic feet increase in natural gas storage was the largest on record for the month of September, and the second highest Fall injection in the modern records for this storage report ...