Shale Output Sees US Return As Net Oil Exporter

By Glenn Dyer | More Articles by Glenn Dyer

The US exported more oil and petroleum products than it imported for the first time in decades last week, the US Energy Information Administration (EIA)’s weekly report revealed on Thursday.

Net exports of crude oil and petroleum products from the country totalled 211,000 barrels per day in the week ended November 30, against more than 1.2 million barrels a day the week before and 2.77 million barrels a day a year ago.

Last week the US imported 7.2 million barrels a day (b/d) of crude oil and 1.6 million b/d of refined products, the EIA said.

It exported a record 3.2 million b/d of crude and more than 5.8 million b/d of products, producing the small net export figure.

The week’s data means that for a brief time America was no longer a net importer of crude and oil-based products which totaled more than 12.5 million barrels a day back in 2005.

While it probably won’t be repeated very often in coming months the changing figures reflect trade flows, that are increasingly being influenced by rising US production and exports, especially from the shale sector.

The rise of shale oil output, the end of prohibitions on crude oil exports and investments in advanced oil refining capacity has cut US crude oil imports and also seen the country re-export millions of barrels of fuels such as petrol and diesel, some of it processed from imported oil.

The lack of agreement on a cap on production by OPEC (it has been postponed to a meeting tonight with Russia and other non-member producers) is likely to end up as a done deal by the weekend with a cap set at around 1 million barrels a day which will not be enough to put a line under weak global prices.

And that’s the biggest danger to America’s production.

US analysts say that slumping prices could be particularly damaging to producers in the Bakken, Permian and other US shale regions.

Producing oil from ‘ racking’ shale rock is costlier than conventional drilling, though in recent years, shale producers have improved their break-even prices — the minimum required to drill at a profit.

The US Energy Information Administration last month raised its outlook for US output, predicting it would surpass 12 million barrels a day by mid-2019. It is currently running at 11.7 million barrels a day, the highest ever.

The share prices of some of the leading fracking producers have taken a pounding in recent weeks as prices have slid.

And finally there is a great irony in the improved US oil production and export position.

Despite the fall in imports and the rise in exports, America’s trade deficit hit its widest level in a decade in October as the nation registered a record imports and a fall in exports to China.

The Department of Commerce said Thursday the gap between US imports and exports grew 1.7% month-over-month to $US55.5 billion, the most since October 2008 and the fifth straight month of an expanding trade deficit.

For September, the US trade deficit was revised to $US54.6 billion from $US54 billion.

America’s goods trade deficit with China jumped 7.1% to $US43.1 billion.

US soyabean exports fell by $US800 million in October, while exports of civilian aircraft and foods, feeds and beverages also dropped. Industrial supplies and materials rose.

High shipments of cars, pharmaceuticals and travel services lifted imports by 0.2% to $US266.5 billion, the highest on record. Exports fell 0.1% to $US211 billion.

America’s trade position would have been considerably worse if it hadn’t been for the oil production boom and President Obama’s decision to free up exports in 2015.

Donald Trump will now preside over record trade, and budget deficits (in coming years) and a rising and record level of debt.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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