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Page added on May 3, 2016
Despite Shale Glut, U.S. Imports More Foreign Oil
The U.S. is importing more foreign crude than it has in years, becoming one of the last ports of call for many oil-producing nations despite a glut of crude from domestic companies.
Oil imports this year have surged 20% to about eight million barrels a day since early May 2015, when they approached a 20-year low, according to federal data. Crude from the Republic of Congo, Russia and Brazil is arriving at U.S. ports, while Canada is sending a record amount of oil to the U.S., the data show.
A series of market disruptions in recent months is one reason for the sharp rise in imports, even though U.S. production is close to a three-decade high at nearly nine million barrels a day. These changes include Iran’s return to exporting crude after sanctions were lifted in January, a move that indirectly led to more U.S. imports even though Iran itself can’t sell to the U.S.
Another big driver: The rest of the world is running out of places to store oil. Facilities from Rotterdam to Cape Town already are near capacity, but the U.S. still has room to spare, said Brian Busch, director of oil markets for Genscape, a data firm that tracks energy shipments.
The U.S. has filled about two-thirds of its total storage capacity and has room for roughly 100 million barrels more, Mr. Busch said. By comparison, major storage hubs in China and South Africa appear full, and Europe’s main storage space centered in Rotterdam appears to be within 10% of its usable capacity, according to Mr. Busch.
But with more crude heading to the U.S., the states are moving closer to full storage capacity, too, said Skip York, a vice president with Wood Mackenzie, an energy consultant.
As U.S. tanks fill, “it will eventually have to put some downward pressure on U.S. prices,” Mr. York said. Even before then, the raft of new supply from overseas could weigh on U.S. oil prices.
On Tuesday, oil for June delivery fell $1.13, or 2.5%, to settle at $43.65 a barrel on the New York Mercantile Exchange, on expectations that U.S. crude inventories will keep climbing. Crude is up 67% from a 2016 low hit in February but down 28% from a year ago.
Still, rising imports isn’t bad news for everyone in the oil patch. Traders that can afford to hold oil and lock in higher sales through the futures market are big beneficiaries.
Refiners like Phillips 66, major energy companies like BP PLC and international trading houses like Mercuria Energy Group are storing foreign crude in the U.S. so they can sell it for a profit later, according to federal data.
Socking away oil in American storage can cost between 30 cents and 85 cents a barrel each month, which is well below the $1 a barrel or more it takes to keep crude floating in oil tankers, observers said.
“That’s precisely why some of these traders import it, to put it in storage,” said Amrita Sen, co-founder of Energy Aspects, a London consulting firm.
A Wall Street Journal analysis of U.S. Energy Department numbers shows nearly 114 million barrels of foreign oil entered the U.S. between May 2015 and February and went to storage tanks. The majority is parked in Oklahoma and Illinois. That figure is up 30% from less than 88 million barrels in the same period a year earlier.
Meanwhile, wait times to deliver foreign crude into the U.S. have become so backlogged that more than 28 million barrels of oil are sitting idle on tankers in the Gulf of Mexico, according to ship-tracking firm ClipperData. That figure is more than double the normal level, ClipperData said.
Storage space isn’t the only reason for the U.S. import boom. Countries like Venezuela and Iraq are selling oil for low prices just to keep pumping, observers said, and Iran is ramping up exports.
U.S. refiners still are prohibited from buying Iranian oil, but crude from the Persian Gulf country going to other destinations has unleashed a chain reaction that is causing more oil to flow into the U.S.
Iran has been underpricing many of its competitors to win back market share. That means some countries that got cut out of business in Europe and Asia because of lower-priced Iranian crude are selling to the U.S. market, traders and analysts said.
Countries like Angola, Albania and the U.K. recently delivered crude to New Jersey, California and Louisiana after Iran underpriced them, according to oil traders and analysts. These countries haven’t had much U.S. business since the shale revolution until this year, according to ClipperData.
Saudi Arabia also shipped 33% more crude to the U.S. at the start of 2016 than it did during the same period last year, boosting volumes into the country back over one million barrels a day, federal data show, as the kingdom seeks to increase its market share.
Tom Cambridge, chief executive of Cambridge Production Inc. in Amarillo, Texas, said he has been concerned about the increase in imports and the downward pressure that it can exert on U.S. oil prices.
He and a few other oil executives have been trying to drum up support among politicians to push for quotas on foreign oil imports, he said. “If you’re filling up at a station in Texas, chances are you’re running on Saudi gasoline,” Mr. Cambridge said.
Another factor influencing imports: The cost of shipping oil on U.S. trains is more expensive than importing foreign crude, a reflection of low oil prices and shifting transportation costs.
Refineries in Washington state, which often process Alaskan crude, are importing more oil from Argentina and Brazil, according to federal records. New Jersey and Pennsylvania plants are importing from Azerbaijan, Chad and Gabon, crude that competes directly with the Bakken Shale.
“It currently makes more sense to import a tanker of crude from Nigeria than to buy an oil train from North Dakota,” said Stephen Wolfe, senior oil strategist in Houston at Trafigura Beheer BV, a commodities trading firm.
42 Comments on "Despite Shale Glut, U.S. Imports More Foreign Oil"
Anonymous on Wed, 4th May 2016 12:14 am
Gee, whoda ever thought that….
Apneaman on Wed, 4th May 2016 2:50 am
Energy independence my ass. Someone pass the corns a tissue. It’s all over except the excuse making. That should be fun. Marmi and boat – dazzle us all with some graphs N shit.
U.S. oil industry bankruptcy wave nears size of telecom bust
“The number of U.S. energy bankruptcies is closing in on the staggering 68 filings seen during the depths of the telecom bust of 2002 and 2003, according to Reuters data, the law firm Haynes & Boone and bankruptcydata.com.
Charles Gibbs, a restructuring partner at Akin Gump in Texas, said the U.S. oil industry is not even halfway through its wave of bankruptcies.
“I think we’ll see more filings in the second quarter than in the first quarter,” he said. Fifteen oil and gas companies filed for bankruptcy in the first quarter.”
http://www.reuters.com/article/us-usa-shale-telecoms-idUSKCN0XV07V
Anonymous on Wed, 4th May 2016 5:24 am
But, but, the ministry of truth has been telling us amerikan frak gas is going ‘save’ Europe from the ebil Putin and create an endless of bounty merikan prosperity at the same time. Unicorns and rainbows included as I recall. The uSgov and its oil corporations would never lie about something like that, right?
JuanP on Wed, 4th May 2016 8:47 am
Russia boosts oil production, https://www.rt.com/business/341772-russia-oil-exports-prices/
geopressure on Wed, 4th May 2016 1:17 pm
Looks like the Record Longs (+600 MILLION BBLS) in Crude Futures are about to get squeezed…
Obama is fucking relentless… When ALL logic says to buy oil, Obama has the power to take it the other way…
—
I totally understand the stock market has been turned into a joke, but one would think that the commodities market should retain a sense of realism… because at the end of the day, those contracts are tied to tangible goods that you can hold in your hand… Nope, CME has been bought out or extorted, & the commodities market is no longer dictated by logic…
In a few more weeks, there will be gasoline shortages throughout the US & the oil prices are still $40/BBL, then there will be riots in Texas… Hell, there’s a riot in my office right now (but it’s just me)…
PracticalMaina on Wed, 4th May 2016 1:57 pm
http://www.stltoday.com/business/local/southern-illinois-coal-plants-could-idle-after-electricity-price-drop/article_09606e76-d953-5d7e-a8a9-a1cfc0cbb675.html
Some more highly profitable ff bizz models. Executives are admitting that it is not environmental controls or natgas but simply prices that are too low. They are teaming up with a nuke plant operator Exelon to bitch to lawmakers about low prices. Too cheap to meter? More like not competitive even when given a free pass to screw over mother nature and big subsidies, whaddya know?
PracticalMaina on Wed, 4th May 2016 2:01 pm
Coal powerplant not able to compete in the home state of the largest coal company in the nation. Looks like Peabody wont be seeing more than around 10$ a ton anytime soon. I can’t see them ever leaving bankruptcy protection. This is with all of the leases on federal land still producing a majority of the coal in the west, and is sold at a huge discount by the federal government.
Apneaman on Wed, 4th May 2016 3:07 pm
Art Berman
Gasoline Demand Is A Red Herring For The Oil Market
http://www.artberman.com/gasoline-demand-is-a-red-herring/
Sissyfuss on Wed, 4th May 2016 9:42 pm
Gasoline consumption is up 3000% in Fort McMurray, Alberta as 80,000 residents flee for their lives from a climate disrupted firestorm fueled by low humidity and 90 degree temps that are almost double the norm. Storage hell! Ship those poor souls some petroleum before the summer driving season starts!
rockman on Thu, 5th May 2016 7:11 am
And what has happened with a lot of that imported oil: during 2013-15 3 BILLION BBLS OF THAT IMPORTED OIL was refined with the products immediately exported. According to the govt last February we exported oil and refined products ar a rate of 4.95 MILLION BBLS PER DAY. IOW one need to subtract that volume from our imports to get net imports.
The US has become the world’s refinery. One has to adjust those oil import numbers by these FACTS. The surge began in 2005 from the 1 million bbls/day that had been the typical volume for the PREVIOUS 20 YEARS. IOW a 500% increase in the last 10 years from the norm. Which I’m sure is just coincidental with the big increase in the price of domestic refined products in the US since 2006. LOL.
shortonoil on Thu, 5th May 2016 8:20 am
“IOW one need to subtract that volume from our imports to get net imports.”
Less 7 to 10% for refinery gains.
The magical trick of creating nothing out of something.
Boat on Thu, 5th May 2016 10:25 am
“Energy independence my ass. Someone pass the corns a tissue. It’s all over except the excuse making. That should be fun. Marmi and boat – dazzle us all with some graphs N shit”.
I have yet to see any claim of US oil independence from a poster. Any information I have linked has never made such a claim.
I did post a link that said the the US would become a net nat gas exporter in 2016 when conventional wisdom says 2017.
ape, learn to stick with reality.
No need to embellish a one sided view. The numbers will reflect collapse when it happens. Numbers will reflect why a dramatict sift occurs. So far a few of us just appear to be better at reading them.
GregT on Thu, 5th May 2016 10:33 am
Natural Gas Imports and Exports Third Quarter Report 2015
Prepared by:
U.S. Department of Energy
O ce of Fossil Energy
O ce of Oil & Natural Gas
O ce of Regulation and International Engagement Division of Natural Gas Regulation
“U.S. imports totaled 657.8 Bcf and U.S. exports totaled 451.3 Bcf, resulting in net U.S. imports of 206.6 Bcf. Most of the imports came from Canada, comprising 96.3 percent of the total.”
“As illustrated in the tables in Section 1, total imports increased by 3.3 percent compared to last quarter. Pipeline imports from Canada increased by 0.7 percent, while pipeline imports from Mexico also increased by 8.1 percent”
“LNG imports increased 237.9 percent”
http://energy.gov/sites/prod/files/2016/02/f29/3Q2015_1.pdf
PracticalMaina on Thu, 5th May 2016 10:35 am
Was it already 100 years? I swear I was seeing commercials promising 100 years of energy independence like 2 years ago, did I slip through space-time?
Boat on Thu, 5th May 2016 10:38 am
shortonoil on Thu, 5th May 2016 8:20 am
“IOW one need to subtract that volume from our imports to get net imports.”
Less 7 to 10% for refinery gains.
The magical trick of creating nothing out of something.
Apparently our resident Phd needs to learn a little about how the density of oil changes during the refining process.
PracticalMaina on Thu, 5th May 2016 10:41 am
Apneaman good article.
GregT on Thu, 5th May 2016 10:41 am
SHORT-TERM ENERGY AND SUMMER FUELS OUTLOOK
Release Date: April 12, 2016
“In January 2016, total marketed production of natural gas averaged 79.0 Bcf/d, an increase of nearly 1% from its December 2015 level. Production in Pennsylvania and West Virginia (two states with Marcellus production) increased substantially from December 2015 levels, offsetting production declines in other areas, particularly in Texas. EIA survey data have shown some production flattening on a national level, and EIA projects relatively low production growth through most of 2016, as low natural gas prices and declining rig activity begin to affect production.”
“EIA expects growth in U.S. natural gas production through 2017 to reduce demand for natural gas imports from Canada”
https://www.eia.gov/forecasts/steo/report/natgas.cfm
onlooker on Thu, 5th May 2016 10:43 am
I see that in this article of 2015, they were saying US would be energy independent in 4 years. For how long have they been promising that. For as long as we have NOT been energy independent around since 1975 or so. Stay tuned in another 4 years, they will once again say in 4 years we will be energy independent.
onlooker on Thu, 5th May 2016 10:44 am
Sorry here is link to the article I mentioned. http://money.cnn.com/2015/04/15/investing/us-energy-independence/
GregT on Thu, 5th May 2016 10:44 am
“Apparently our resident Phd needs to learn a little about how the density of oil changes during the refining process.”
Apparently our resident moron needs to go back to grade school and re-learn basic subtraction and addition.
PracticalMaina on Thu, 5th May 2016 10:50 am
I doubt that we will see a decrease in imports, other than maybe due to a continued economic downturn. Natgas conversions for heating appliances are big in my area right now. Not to mention the large scale shuttering of coal that is beginning to take place. Not to mention with the tar sands production being decreased due to the fires there is going to be a temporary decrease in Canadian national demand, driving prices down and hurting American gas producers more.
Boat on Thu, 5th May 2016 11:07 am
Apneaman on Wed, 4th May 2016 3:07 pm
Art Berman
Gasoline Demand Is A Red Herring For The Oil Market
http://www.artberman.com/gasoline-demand-is-a-red-herring/
Nice link showing the improved efficiency of US cars.
GregT on Thu, 5th May 2016 11:11 am
“Nice link showing the improved efficiency of US cars.”
As usual you display a complete lack of understanding of the exponential function, as well as Jevon’s paradox.
You’re completely full of shit Boat.
Boat on Thu, 5th May 2016 11:17 am
PracticalMaina
Oil is a world market. Refineries will buy the cheapest oil around the world. Ps. If anything fire related prices will spike short term. The global glut won’t grow as fast.
Boat on Thu, 5th May 2016 11:24 am
Jevon’s paradox is bullcrap along with the international cartel and many of your conspiracy theories. Your just out there dude.
GregT on Thu, 5th May 2016 11:32 am
Jevon’s paradox is an observation Boat. In other words, a reality. Something that you are very proficient at ignoring. Which not only makes you ignorant, but also an idiot.
marmico on Thu, 5th May 2016 11:42 am
Artie Berman did another ASPO brain fart. The gasoline consumption (product supplied) in his chart is bull shit.
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mgfupus2&f=a
onlooker on Thu, 5th May 2016 11:58 am
Jevons paradox a conspiracy theory. Now that is too way out even for you Boat. Is gravity also a conspiracy theory?
GregT on Thu, 5th May 2016 12:06 pm
And by the way. For about the hundredth time;
It’s you’re, not your.
Dumb fuck.
onlooker on Thu, 5th May 2016 12:10 pm
Perhaps you prefer debating with me Boat, I use less profanity. haha.
Boat on Thu, 5th May 2016 12:37 pm
onlooker,
If the price of food drops does not mean I would eat more. If I buy more efficient windows and save energy does not mean I will use more energy.
onlooker on Thu, 5th May 2016 12:42 pm
Yes that is Jevon’s paradox. Efficiency gains are offset by increased use and uses.
Boat on Thu, 5th May 2016 1:13 pm
onlooker,
I gave you two examples where that may not the case. Your supposed show me how I’m wrong. Lol
PracticalMaina on Thu, 5th May 2016 1:29 pm
Boat there is a very good chance that if you have better windows, (which is 9 time out of 10 not the biggest heat loss area) and therefore save money on fuel, you will increase the temp in your house. People can rise above the temptation for added comfort, but as a collective mass this usually happens slower than the tectonic plates.
Davy on Thu, 5th May 2016 1:35 pm
Jevon’s paradox is a macro phenomenon and an incomplete one at that. It is definitely not applicable to an individual because human nature is so diverse. At the macro level there are also studies that show wide discrepancies dependent on location and kind of efficiency studied. Overall in aggregate and over our economic history the theory holds well.
Boat on Thu, 5th May 2016 3:47 pm
Davy,
Human family size shrunk as a result of machines and fuel. Many developed countries would actually be losing population were it not for immigration.
Jevon’s paradox seems likely until growth stops. After that tech and efficiency will eat into the energy market. Miles driven or total btu’s will grow but not FF use. The trend of cheap energy will continue.
Davy on Thu, 5th May 2016 3:52 pm
Boat, read again what you just posted and try again. You are saying what you want to hear. Reality is much more nuanced.
GregT on Thu, 5th May 2016 3:57 pm
@Boat,
It is generally a good idea to have an understanding of what something actually means, before making attempts to debate others about it’s merit.
You clearly do not understand Jevon’s paradox. As per usual, you spew nothing but complete and utter useless non-sense.
Boat on Thu, 5th May 2016 4:14 pm
gregt,
Move to the middle east with your brothers. You could grow a beard, wear a robe and spout your hate. Peas inna pod.
GregT on Thu, 5th May 2016 5:46 pm
I have very close personal friends both from the US, and from the Middle East Boat. They are all lightyears ahead of you in intellect.
I’ve shown them some of your ‘posts’, and even my American buddies think that you’re a complete idiot.
Boat on Thu, 5th May 2016 6:03 pm
Do you show them your anti American rants? Your crazy views about media? Do you burst into profanity if they say something different than your world view? You blame everything on everybody else. Do you explain that and why?
GregT on Thu, 5th May 2016 6:14 pm
No need to do any of the above Boat. They understand my position perfectly. It doesn’t take a rocket scientist to figure things out.