October 9, 2019 / 2:55 PM / 8 months ago

U.S. oil exports to Europe hit weekly record as Asia drops off

HOUSTON, Oct 9 (Reuters) - U.S. oil shipments to Europe hit a record 1.8 million barrels per day (bpd) for the 7-day period ended Monday as exports to Asia fell amid a shortfall in supertankers, according to market intelligence firm Kpler.

Crude exports to Europe, which are typically on smaller vessels, reached their highest-recorded weekly rate, and were nearly double the 924,000 bpd of the previous week. Shipments to Asia fell to 508,000 bpd, from 1.1 million bpd, in the same period ended Monday, the data showed.

It's unclear when crude shipments to Asia will recover, given surging freight rates in recent days, said Reid I'Anson, global energy economist at Kpler. Rates from the U.S. Gulf Coast to Asia TD-LPP-SIN have more than doubled to more than $13.25 million since the United States blacklisted two units of Chinese transportation giant COSCO.

The world's supply of Very Large Crude Carriers (VLCCs), which carry 2 million barrels apiece, was already disrupted by attacks last month on Saudi Arabian oil facilities and made worse by U.S. sanctions on COSCO. Occidental Petroleum Corp on Friday provisionally chartered a VLCC to South Korea for a record $13.25 million, brokers said.

"As VLCC rates climb, exporters will look at shorter journeys on smaller vessels," favoring U.S. to European routes, said Matt Smith, director of commodity research at vessel-tracking firm ClipperData.

On Sept. 30, freight rates for Aframax-class tankers from Houston to Rotterdam TD-HOU-RDM rose to $27.79 per metric ton per trip, the highest since February and up from $10.14 per metric ton before the Sept. 14 attacks on Saudi facilities. The rate was $18.69 per metric ton on Monday.

The spread between U.S. crude futures and Brent also has widened over the past month, boosting the incentive for U.S. producers to ship their crude to Europe. The spread WTCLc1-LCOc1 settled at a discount of $5.62 a barrel on Tuesday, from $4.07 on September 2.

Demand for crude from the U.S. Gulf Coast to Europe "depends a lot on the Brent-WTI spread, which is widening at the moment," a U.S. shipbroker said. (Reporting by Collin Eaton in Houston Editing by Nick Zieminski)

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