FINWIRES · TerminalLIVE
FINWIRES

US Crude Exports Hit Record in May on SPR, Gulf Flows, Kpler Says

By

US crude exports surged to a record 5.6 million barrels per day in May, fueled by Strategic Petroleum Reserve releases and elevated Gulf of Mexico output, though a slowdown is forecast in June, Kpler strategists said in a Monday note.

The record export level dwarfs a shifting barrel composition, with flows increasingly reliant on non-traditional sources rather than the light sweet shale crude that typically dominates US seaborne exports.

Matt Smith, director of commodity research at Kpler, said that about one-third of the 58 million barrels released from the SPR since late March have been exported, with Europe emerging as the primary destination.

Smith said that the SPR releases span five crude grades sourced from multiple storage caverns, offering refiners a broader slate of medium- and sour-grade barrels than US shale production.

Simultaneously, Kpler said that Gulf of Mexico crude exports have surged, with over 28 million barrels shipped over the past two months, three times the typical pace. The data analytics firm said the volumes have been split relatively evenly between Europe and Asia.

A redistribution effect across the US Gulf Coast infrastructure has reinforced the export surge. SPR barrels have been increasingly processed by domestic refiners, effectively displacing some offshore production and freeing up Gulf of Mexico crude for export markets.

Traditionally, Corpus Christi and Houston account for about 85% of US crude exports, largely driven by light sweet shale barrels. However, their combined share fell to about 70% in May, despite record total exports, highlighting both infrastructure constraints and the changing barrel mix.

Corpus Christi continues to face pipeline bottlenecks, while Houston remains constrained by dock capacity, limiting incremental export growth from the country's two largest crude export hubs.

Kpler said instead, exports from smaller or less conventional ports jumped to 1.6 million b/d in May, supported by SPR-linked flows and stronger Gulf of Mexico output.

Smith said that the growth in exports outside the main Gulf Coast hubs confirms how alternative flows have temporarily reshaped US crude logistics. He said that infrastructure constraints remain binding even amid high production and inventory drawdowns.

The surge in outbound shipments has coincided with a sharp tightening in US crude balances. Kpler said that US crude inventories have dropped by 86 million barrels since late March, including a 28 million barrel draw over the past two weeks.

Stockpiles at Cushing, Oklahoma, a key pricing hub for WTI, are now approaching operational lows. Kpler said that recent estimates indicate a further 1.4-million-barrel draw in the latest week, leaving inventories only a few million barrels above minimum operating thresholds.

The tightening at Cushing has contributed to firmer prompt price spreads and supported stronger export economics even as global crude balances remain mixed.

Related Articles

Commodities

US Natural Gas Prices Flat Over the Week Amid Tighter Storage, Drop in LNG Feedgas Flows

US natural gas markets were mixed over the week amid a confluence of factors, including a smaller-than-expected storage injection, a dip in LNG feedgas flows, and warmer weather across much of the country.In the futures market, the Nymex front-month contract rose to $3.22 per million British thermal units on Friday, up from $3.095/MMBtu on May 29.Natural gas spot prices dropped by $0.20/MMBtu to $2.95/MMBtu during the week ended June 3, from $3.15/MMBtu the prior week, according to the US Energy Information Administration's Weekly Gas Storage Supplement, released on Thursday.This comes despite elevated temperatures across the central US, leading to a 1 billion cubic feet per day, or 3% increase in gas-driven power consumption. Yet, the overall US natural gas consumption fell by 1 Bcf/d, according to LSEG data.Natural gas supplies, however, remained flat over this period, with a 0.3 Bcf/d increase in imports from Canada, largely offset by a 0.2 Bcf/d decline in dry domestic natural gas output.After posting a recovery last week, LNG feedgas flows dipped below 16 Bcf/d earlier this week, a multi-month low, as spring maintenance across several leading facilities continued to weigh on flows, adding to the market's bearish sentiment.Prices were mixed across regional hubs, with the Houston Ship Channel reporting a $0.12/MMBtu increase from the prior week, as daily temperatures soared during the week, while the Waha Hub in West Texas saw a $0.43/MMBtu decline during the same period.The decline was primarily attributed to pipeline maintenance activities, which constrained gas takeaway capacity at the Permian Basin.The net injection into storage for the week ended May 29 was 95 Bcf, up from 92 Bcf the prior week, bringing total gas inventories to 2,578 Bcf, according to EIA data.This was below consensus estimates at 99 Bcf, according to data compiled by Investing.com, making it a bullish storage build.During the same period last year, the EIA reported a net injection of 119 Bcf, while the five-year average for this period was 101 Bcf.All regions reported a net injection of working gas into storage for the week ended May 29, with the Midwest region leading the way at 34 Bcf, followed by the East and South Central regions at 33 and 16 Bcf, respectively.At 2,578 Bcf, US working gas inventories were 3 Bcf, or 1% below the corresponding period a year ago, while still posting a 138 Bcf, or 6% surplus compared to the five-year average for this period.According to Gary Cunningham of Tradition Energy, this lower-than-expected storage build "pushed near-term gas to new highs," and while he expects some profit-taking, the bullish weather forecasts should support prices as "power sector demands and the low injection put us behind pace to match last year's end-of-season storage."Weather forecasts have continued to point to above-normal temperatures across the country, except for a tiny sliver of Alaska, from June 12 to June 18, according to the National Weather Service. This is expected to keep gas power burn elevated over the coming weeks.A total of 29 liquefied natural gas-carrying vessels left US ports during the week, down from 32 vessels the previous week, with a total capacity of 111 Bcf, down by 10 Bcf from the prior week.In international markets, European TTF gas prices averaged $16.27/MMBtu for the week ended June 3, $0.08/MMBtu lower than the previous week. Meanwhile, the Japan-Korea Marker averaged $18.55/MMBtu, about $0.05/MMBtu lower than the prior week.

Commodities

US Natural Gas Update: Futures Fall as Ample Supplies Offset Weather Support

US natural gas futures retreated on Friday as ample domestic inventories and weaker flows to LNG export terminals suggested growing supplies in the domestic market, offsetting support from hotter-than-expected weather forecasts and ongoing geopolitical risks.The front-month Henry Hub contract and the continuous contract price fell by 3.48% to $3.22 per million British thermal units.The decline came as US natural gas inventories remained comfortably above seasonal norms. The US Energy Information Administration reported Thursday that working gas in storage rose by 95 billion cubic feet in the week ended May 29, below market expectations for a 99-105 Bcf increase and under the five-year average build of 101 Bcf. Despite the smaller-than-expected injection, inventories stood 5.7% above the five-year seasonal average, indicating adequate supply conditions. Stocks were down 0.8% from a year earlier.Additional pressure came from reduced LNG export activity. Net flows to US LNG export terminals were estimated at 17.2 Bcf/d on Friday, down 0.2 Bcf from the previous day and 5.8% below the prior week, according to BNEF data cited by Barchart. Export flows remained near their lowest levels in more than two weeks as seasonal maintenance continued to constrain LNG shipments, leaving more gas available for domestic consumption.Supply fundamentals also remained robust. Dry gas production across the Lower 48 states averaged 110.4 Bcf/d on Friday, up 1.7 Bcf from a year earlier. Domestic demand was estimated at 70.6 Bcf/d, up from the previous day but down 2.0% year-over-year. Celsius Energy said Friday that powerburn rose 3.5 Bcf from the day before to 36.4 Bcf.Weather forecasts, however, provided some support to prices. Commodity Weather Group said Friday that forecasts had turned hotter, with above-normal temperatures expected across much of the Midwest and Northeast through Jun. 14. Elevated temperatures could increase electricity demand for air conditioning, boosting natural gas consumption.Geopolitical developments, or the lack thereof, also remained supportive as negotiations between the US and Iran appeared to be at a standstill with no progress on reported efforts to fully open the Strait of Hormuz, which remained effectively closed for the 14th week.Meanwhile, European gas inventories remained relatively tight. Gas Infrastructure Europe reported Friday that storage facilities stood around 41% of capacity, well below the five-year seasonal average of 56% for this time of year, according to data from the Swiss Federal Office of Energy.

Commodities

US SPR to Gain 40 Million Barrels After Iran Conflict Ends, Wright Says

The Strategic Petroleum Reserve will receive an additional 40 million barrels of crude after the Iran conflict ends through existing repayment agreements, Energy Secretary Chris Wright said in a Fox Business interview on Friday.Companies that borrowed oil from the Strategic Petroleum Reserve in recent months will return the crude with premiums, leaving the reserve with more oil than it originally released."Each barrel we flow out, we're getting 1.25 barrels back next year. We're going to add 40 million barrels to the SPR after this conflict is over," Wright said.The Department of Energy is loaning about 133 million barrels from the Strategic Petroleum Reserve to companies that will repay the crude with premiums of up to 24%."I'm not concerned, because we're not selling any barrels of oil, we're flowing oil to the marketplace in the short term when it needs it, and we're trading those barrels," Wright added.Wright said the repayment agreements will replenish the SPR without imposing any costs on US taxpayers.