MOSCOW (MRC) -- US weekly crude exports fell to their lowest level November in early July, according to US Energy Information Administration oil data July 8, as arbitrage incentives to Northeast Asia have eroded, reported S&P Global.
The US exported just 2.39 million b/d of crude for the week ended July 3, their lowest since the 2.37 million b/d seen in early November. Exports last week were down more than 700,000 b/d from the week prior.
Arbitrage economics for WTI into Asia have been difficult to work. For example, WTI MEH delivered into Japan at a scant 14 cent/b discount to Russian ESPO in Japan over June, according to S&P Global Platts Analytics crude Arbflow data. As recently as April, economics favored WTI MEH by over USD7/b. In fact, the data shows WTI MEH delivering at a small premium to ESPO at the start of this week.
Additionally, the closure of the Dakota Access Pipeline (DAPL), which has been ordered by a US Judge to be shut by Aug 5, would lower the volumes of light sweet crude available on the USGC, thus leading to higher values for sweet grades, like WTI MEH. Indeed, since the July 6 ruling, differentials for WTI MEH have risen by 20 cents/b while differentials for Light Louisiana Sweet crude have gained 70 cents/b.
While US exports have waned in recent months, the nascent US crude export market is still recording new firsts. The first VLCC exported from the US to Canada, the Eliza, is set to reach the Irving Oil Refinery in Saint John, New Brunswick on July 13, according to Kpler data. The vessel loaded at the Louisiana Offshore Oil Port on April 7, and spent some time floating in the USGC before moving towards its current destination, according to Kpler data.
The Irving Oil Refinery in Saint John can process around 320,000 b/d of crude oil, and more than half of the finished product is exports to the Northeast US, according to the company's website.
As MRC wrote before, refiner Irving Oil will lay off 6% of its global workforce due to economic challenges presented by the coronavirus pandemic, according to the company's statement. The layoffs will affect 250 workers across its operations in Canada, the United States, Ireland and the UK.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's DataScope report, PE imports to Russia dropped in January-June 2020 by 7% year on year to 328,000 tonnes. High density polyethylene (HDPE) accounted for the main decrease in imports. At the same time, PP imports into Russia rose in the first six months of 2020 by 21% year on year to 105,300 tonnes. Propylene homopolymer (homopolymer PP) accounted for the main increase in imports.