Saturday, March 11, 2017

Oil Exports to Rise with U.S. Production Increases

ZeroHedge reported:

Rising production in the Permian, coupled with cheap pipeline and railway transport fees to the Gulf of Mexico, will enable the U.S. to significantly raise its already record-high crude oil exports, Mike Loya, head of the Americas business at oil trading giant Vitol Group, told Bloomberg in an interview published on Friday.

We will see a lot more growth in U.S. crude exports,” said the manager of Vitol, the company that handled the first U.S. cargo after restrictions on oil exports were lifted at the end of 2015.

According to Loya, the Permian crude production would increase by between 600,000 bpd and 700,000 bpd by the end of this year, and “a lot of that is going to be exported”.

Should exports keep their pace, they could help alleviate some of the record-breaking inventories piled up in the U.S. 
Vitol is a joint venture partner with The Carlyle Group in Europe, where Vitol's CEO sees U.S. oil export expansion.  It also has a joint venture with PEU Helios Investment Partners in Africa.  Carlyle lost nearly $400 million on a North African oil deal.  I'll venture Carlyle Capital Corporation investors understand how an investment can disappear in a stressed financial market.

What's fueling exports of WTI?  The price spread between WTI and Brent crude.  When U.S. production could not be exported the spread reached $28 a barrel.   Carlyle's east coast refinery Philadelphia Energy Solutions entered dark times when the spread narrowed.  Carlyle can refine oil domestically or in Europe until they decide to monetize the lot.

U.S. record breaking inventories look to go overseas instead of dropping prices at home.  It's the PEU way.