OPEC Imports Collapse; Notes From All Over, Part 3 -- October 29, 2019

From Rigzone:

With U.S. crude oil production up 150 percent to 12.4 million b/d since 2008, the great American shale boom has collapsed imports from OPEC.

In 2018, OPEC met less than 15 percent of total U.S. oil demand, down from over 30 percent in 2007.

Overall, U.S. imports from OPEC have sunk to their lowest levels since 1986.

In particular, U.S. imports from Nigeria, a longtime supplier that has major production problems and inconveniently sells the lighter type of crude that has been overflowing from America’s shale fields, has fallen 85 percent to 190,000 b/d.

Imports from Saudi Arabia are down over 70 percent, although it still accounts for a third of the 1.4 million b/d that OPEC ships to the U.S. per the latest EIA data.

The loss of OPEC oil in the U.S. market has really come from a triad of factors: surging U.S. crude production, Saudi Arabia’s production cuts, and strong U.S. sanctions on Venezuela.

In addition, the fall reflects a broader trend of OPEC understandably trying to shift sales to the fast-growing Asian markets. Since 2008, for instance, China and India have accounted for 60 percent of the 13.4 million b/d increase in global oil demand. And these two giants will lead the non-OECD Asian nations that the EIA projects will account for 75 percent of the 20 million b/d in new global demand through 2050, as far out as the EIA currently models.

Much more at the link.

The right kind of oil: Canada.

Indeed, with its heavier oil a match for the U.S. refining system, largest trading partner and firm ally Canada has filled in nicely for the fall of OPEC. In the shale-era since 2008, Canadian oil exports to the U.S. have almost doubled to 4.7 million b/d. Over the past four years, Canada alone has shipped more oil to the U.S. than all OPEC nations combined.

Canada now meets nearly 25 percent of total U.S. oil demand, more than double its share from a decade ago. Canadian oil has benefitted the U.S. by compensating for the falling heavy oil production in longtime suppliers Mexico and Venezuela. 

It has been neighbor Canada that has helped supply those parts of the U.S. that are too distant to take-in the huge amounts of shale oil coming from Texas and North Dakota.

The key exception here is California, where sea-borne shipments from Saudi Arabia, Ecuador, and Colombia have come to replace Canada and dominate the market.

California buys Saudi Arabia oil ($60) vs Canadian oil ($40):

• WTI: $50/bbl
• Saudi: $60/bbl
• Canadian crude index: $40
• Western Canadian Select: $40