As oil flows are re-routed around the world, America is shaping up to be one of the big winners. Exports last week hit a new record above 11 million barrels per day for crude and refined products, with increased shipments heading to Asia and Europe to fill Russia’s gap. Of that, 4 million barrels per day were diesel fuel, marking the highest export level in years. At the same time, Russia is reportedly pursuing deals to sell its oil $30/bbl below market rates, perhaps to head off a future price cap imposed by the US and other countries.
US producers are also benefiting from an improving economy. The government revised its Q2 GDP data up from -0.9% to -0.6%, with consumer spending stronger than previously expected. Although negative, the data suggests that underlying fundamentals – consumer spending, manufacturing, new equipment purchases, employment – are still strong, though perhaps slowing. Gasoline demand has also been recovering, leading to increased gasoline imports as foreign refiners look for somewhere to take their extra gasoline supply.
On the domestic supply side, inventories showed an across-the-board withdrawal this past week, spooking the markets and sending prices higher during morning trading. Crude oil was down 3.3 million barrels. Diesel stocks, which typically rise during the summer, fell 0.7 million barrels. While the size of the draw isn’t significant, anything other than a build is strongly bullish ahead of hurricane season and refinery turnarounds in September and October.