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Last Updated: November 30, 2017
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The United States continues trend toward exporting more gasoline than it imports


Despite record high gasoline consumption, the United States is on pace to export more gasoline than it imports for the second year in a row. Changes in regional markets, increased demand for exports, and high refinery runs are once again leading to the United States to be a net exporter in 2017.


In 2016, the United States became a net exporter of gasoline for the first time on an annual basis with net gasoline exports of 56,000 barrels per day (b/d). Through September 2017 (the most recently available monthly data), the United States averaged net gasoline exports of 55,000 b/d. The shift toward net exports of gasoline on an annual basis has been a long-running trend.


U.S. gasoline imports and exports are highly seasonal. The United States has typically been a net importer of gasoline in spring and summer months, when domestic consumption increases, and a net exporter in winter months, when demand is lower. However, for every month between April and August 2017, the United States set either record low net imports or record high net exports (Figure 1). Almost year-round net gasoline exports is a major change for U.S. gasoline markets, which is the result of one long-term trend and two more recent trends.

Figure 1. U.S. total motor gasoline trade


Changes in trends of gasoline production and consumption in the Midwest United States, in part, have driven this trend. Historically, the U.S. Gulf Coast (Petroleum Administration for Defense District (PADD) 3) supplied refined products to other regions of the United States where demand exceeded supply, such as the Midwest (PADD 2) and the U.S. East Coast (PADD 1). While the East Coast still relies on supplies from the Gulf Coast and still remains a large net importer of gasoline—619,000 b/d in 2016, the Midwest has reduced its need to draw supplies from the Gulf Coast in recent years. Midwest refineries now are running at higher rates and increased capacity, resulting in more Midwest gasoline demand being met from in-region production. Between 2006 and 2016, Midwest receipts of gasoline from the Gulf Coast declined by 278,000 b/d to 273,000 b/d.


Because of logistical and economic constraints on sending increasing gasoline supplies from the Gulf Coast to other regions, the volumes of gasoline no longer demanded by the Midwest have become available for export. With the Rocky Mountain (PADD 4) and U.S. West Coast (PADD 5) relying largely on in-region or domestic supplies, the balance of U.S. net gasoline imports or exports is between East Coast imports and Gulf Coast exports. Between 2013 and 2016, Gulf Coast gasoline exports increased by 236,000 b/d (54%), while East Coast imports increased by 41,000 b/d (7%), resulting in a shift for the United States as a whole.

Figure 2. PADD total motor gasoline trade


Available Gulf Coast gasoline supplies come at a time when both domestic and nearby fuel markets are experiencing increasing demand for multiple petroleum products, including gasoline. A majority of the growth in U.S. gasoline exports has been to markets in Mexico and Central and South America. In the first half of 2017, Mexico accounted for 53% of the 755,000 b/d of U.S. total motor gasoline exports. Low utilization of Mexican refineries and the ongoing market reforms of Mexico’s retail fuel distribution have resulted in continued increased demand for gasoline supplies from the U.S. Gulf Coast.


At the same time, U.S. domestic gasoline consumption has been increasing to record levels. U.S. gasoline consumption, as measured by product supplied, set a new monthly record high of 9.8 million b/d in August 2017. To meet the combined record domestic gasoline demand and the increased export demand for multiple petroleum products—including gasoline—U.S. refineries have been running at increasingly higher rates. U.S. gross refinery inputs set a record high of 17.8 million b/d for the week ending August 25 and have been higher than the five-year range for a majority of 2017 (Figure 3).

Figure 3. U.S. gross refinery inputs


If the trends of increasing demand from export markets and U.S. refineries producing near record levels of gasoline continues, the United States is likely to become a monthly net exporter of gasoline more consistently.


U.S. average regular gasoline prices fall, diesel prices increase


The U.S. average regular gasoline retail price fell nearly 4 cents from the previous week to $2.53 per gallon on November 27, up 38 cents from the same time last year. The Midwest price fell eight cents to $2.42 per gallon, the Gulf Coast price fell over two cents to $2.26 per gallon, the East Coast and West Coast prices each fell nearly two cents to $2.51 per gallon and $3.04 per gallon, respectively, and the Rocky Mountain price fell less than one cent, remaining at $2.54 per gallon.


The U.S. average diesel fuel price increased over 1 cent to $2.93 per gallon on November 27, 51 cents higher than a year ago. The Rocky Mountain and Gulf Coast prices each increased over two cents to $3.03 per gallon and $2.71 per gallon, respectively, the East Coast and Midwest prices each increased one cent to $2.91 per gallon and $2.88 per gallon, respectively, and the West Coast price increased less than one cent, remaining at $3.38 per gallon.


Propane inventories decline


U.S. propane stocks decreased by 0.6 million barrels last week to 73.2 million barrels as of November 24, 2017, 10.4 million barrels (12.5%) lower than the five-year average inventory level for this same time of year. Gulf Coast, Midwest, and Rocky Mountain/West Coast inventories decreased by 0.5 million barrels, 0.3 million barrels, and 0.2 million barrels, respectively, while East Coast inventories rose by 0.5 million barrels. Propylene non-fuel-use inventories represented 3.5% of total propane inventories.


Residential heating oil and propane prices continue to increase


As of November 27, 2017, residential heating oil prices averaged $2.85 per gallon, over 2 cents per gallon more than last week and almost 45 cents per gallon higher than last year’s price at this time. The average wholesale heating oil price for this week is just under $2.04 per gallon, nearly 1 cent per gallon less than last week but 45 cents per gallon higher than a year ago.


Residential propane prices averaged $2.43 per gallon, almost 2 cents per gallon more than last week and nearly 36 cents per gallon higher than a year ago. Wholesale propane prices averaged $1.12 per gallon, unchanged from last week but 48 cents per gallon higher than last year's price.

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September, 21 2019
Your Weekly Update: 16 - 20 September 2019

Market Watch  

Headline crude prices for the week beginning 16 September 2019 – Brent: US$69/b; WTI: US$63/b

  • Global crude oil prices surged at the start of the week as news that a successful drone strike on the Abqaiq processing plant and the Khurais oil field in Saudi Arabia took out over half of the Kingdom’s crude production capacity
  • Brent prices jumped above US$70/b at one point on fears on global supply disruption, but abated as President Donald Trump authorises the release of US strategic petroleum reserves to cover the market
  • Initial fears that the Saudi Arabian crude output would be crippled for months proved to be extreme, with Saudi Aramco announcing that some 70% of capacity at Abqaiq had been restored within days
  • But more worryingly is that this incident escalates the risk of a full-blown military confrontation with Iran; the US was quick to accuse Iran of the attack, citing data on the attack, which was denied by Iran
  • Yemen’s Iran-backed Houthi rebels claimed responsibility for the attack, although initial results of a Saudi investigation pointed to the weapons originating from Iran
  • For now, crude oil prices have retreated as the risk of widespread supply disruption abated, but tensions are still high in the region
  • This comes after President Trump signals that he was considering easing sanctions in an apparent thaw in the US-Iran relationship; this opportunity now appears to have evaporated
  • Saudi Arabia’s new oil energy minister, Prince Abdulaziz bin Salman, made a positive impression at the recent OPEC+ meeting, with errant members of the group signalling that they were now ready to adhere to the supply deal
  • In Venezuela, the oil crisis continues as ongoing US sanctions now mean that the country cannot find enough vessels to transport its crude, as shippers fear losing insurance coverage if they transport Venezuelan oil
  • Iran has released the UK-flagged Stena Impero vessel that it had impounded, a lone bright spot in a region now clouded by geopolitical tensions
  • Against this backdrop, the US active rig count recorded yet another fall, losing five oil and seven gas rigs for a net drop of 12 to a new total of 886 rigs
  • With the shock of the Saudi drone attacks abating, crude oil prices are retreating back to their previous range – US$60-63 for Brent and US$56-59/b for WTI – as the impact of global supply was minimised; another attack, however, might cause a more permanent shift in prices


Headlines of the week

Upstream

  • Equinor has received consent from the Norwegian Petroleum Directorate to continue operations at the Tordis and Vigdis fields through 2036 and 2040, respectively, extending the life of the North Sea fields by 34 years
  • BP has announced that it will deploy continuous measurement of methane emissions for all future oil and gas projects in a bid to reduce emissions
  • CNOPC and Niger have agreed to collaborate on a 1,892km pipeline to carry oil from Niger’s Agadem rift basin to port facilities in Benin
  • The South African government is tabling a new law that will allow the state to take a free stake of up to 10% in all new oil and gas ventures, hoping to capitalise on a surge in upstream interest after Total’s Brulpadda discovery

Midstream/Downstream

  • As the IMO deadline for low-sulfur marine fuels approaches, refiners have begun stockpiling supplies of very low-sulfur fuel oil to ensure adequate supply; this includes Japan’s Cosmo Oil that aims to begin supplying VLSFO to the domestic marine market by October 2019
  • IndianOil’s Gujarat refinery stated it ready to produce 12,900 b/d of VLSFO by October while its Haldia refinery will start producing 5,500 b/d of VLSFO by December; this should be adequate to cover the India’s marine fuel demand
  • India is considering selling a stake in BPCL, the country’s second largest refiner, to an international firm to boost competition in downstream fuel retailing that has historically been dominated by state firms
  • Valero Energy and Darling Ingredients are launching the first renewable gasoil plant in Texas, focusing on producing renewable diesel and naphtha
  • In the UK, Essar Oil’s Stanlow refinery aims to increase its diet of US crude from a current 35% to 40%, leveraging on cheaper American oil
  • The after-effects of Russia’s contaminated crude through the Druzhba pipeline continues as Total issues a tender to sell 1.3 million barrels of tainted Ural crude through Rotterdam after failing to process it

Natural Gas/LNG

  • Poland has won a ruling from the EU courts to reduce Russian control over the key EU Opal pipeline that carries Russian gas from the Nord Stream link to Germany, preventing Gazprom from using most of Opal capacity in a bit to increase energy security for Eastern European countries
  • Vitol and Mozambique’s state player ENH have set up a new joint venture in Singapore to capitalise on trading opportunities for LNG, LPG, and condensate
  • Australia’s Liquefied Natural Gas Ltd and Delta Offshore Energy will supply gas from the Magnolia fields to an LNG-to-power project in Bac Lieu, Vietnam
  • Eni’s Baltim South West gas field offshore Egypt has started up production, only 3 years after discovery, producing an initial 100 mscf/d of gas
  • US gas player Sempra is looking to take FID on its Energia Costa Azul LNG project in Mexico’s Baja California region by the end of 2019
  • Egypt has announced that it expects to receive first natural gas from Israel by end-2019 through the East Mediterranean Gas pipeline, with initial supplies of 200 mscf/d that will rise to 500 mscf/d by 2020
  • The Independence floating LNG terminal in Lithuania – built to reduce the Baltic region’s dependence on Russian gas – is set to receive its first-ever cargo from Siberia, likely from Novatek’s LNG projects in Yamal
September, 20 2019
Financial Review: Second-Quarter 2019
Key findings
  • Brent crude oil daily average prices were 9% lower in second-quarter 2019 than in second-quarter 2018 and averaged $68 per barrel
  • The 117 companies in this study increased their combined liquids production 4.6% in second-quarter 2019 from second-quarter 2018, and their natural gas production increased 5.0% during the same period
  • Nearly half of the companies were free cash flow positive—that is, they generated more cash from operations than their capital expenditures
  • Dividends plus share repurchases were nearly one-third of cash from operations, slightly lower than the six-year high set in first-quarter 2019

Distributions to shareholders via dividends and share repurchases amounted to nearly 33% of cash from operations


See entire second-quarter review

September, 20 2019