It’s a relatively calm day for oil markets – no new hurricanes, OPEC headlines, or COVID shockers. California did ban the sale of new fossil fuel-consuming cars after 2035, joining some European countries who have offered similar legislation, though the change is too far in the future to impact markets today. Given today’s quiet outlook, today’s article borrows from an early draft of our upcoming FN360 publication.
US Becomes Net Exporter Once Again
The pandemic didn’t just disrupt oil production – it also temporarily upset America’s status as a net energy exporter. After years of importing more crude than we exported, America became a net exporter on a weekly basis for the first time in November 2018. By October 2019, the US was regularly exporting more than it brought in. During the first quarter of 2020, the US was exporting an average of 0.5 MMbpd more than was imported.
The pandemic caused a rapid change. In June, the US imported 1 MMbpd more than it exported. As US crude production fell 2 MMbpd, exports fell by nearly as much. During June, imports also leapt nearly 1 MMbpd higher as Middle Eastern countries, struggling to find customers, dumped their crude in the resilient US market.
During Q3, the US once again became a net exporter of crude and refined products, though by a smaller margin. Exports, which have been rising steadily since 2015, sank back to 2019 levels – roughly 1 MMbpd below its peak of 4.4 MMbpd in March 2020. Fortunately, although exports remain low, imports have fallen even more. Crude imports soared to 7 MMbpd at several points in May-July but fell significantly in August and September. Weakening US demand compared to international peers, combined with Saudi Arabia purposefully limiting exports to the world’s most transparent oil market, caused imports to drop.