Daily Management Review

US oil export hit record high while domestic production and reserves are falling


07/07/2016


Exports of US crude oil reached record levels in almost 100 years. At the same time, production and reserves in the country are falling while Europe is purchasing more and more American oil.



SIXFINGER Ltd. via youtube
SIXFINGER Ltd. via youtube
In May this year, United States set a record in terms of oil exports, according to Reuters, citing data from the US Census Bureau on Thursday. Foreign shipments totaled 662 thousand barrels per day - the highest level since 1920. For comparison, US oil exports in April were at the level of 591 thousand barrels per day, that is, exports increased by 12% in the past month. By the way, the April result was also a record, but only since 1957.

Canada has become the main consumer of US oil by the end of May. It accounted for nearly half of all volume - 308 thousand barrels per day. the Netherlands (110 thousand barrels) are in second place, the third is taken by Curacao (67 thousand barrels.). The UK, Japan and Italy also purchased large volumes (36 thousand, 29 thousand and 23 thousand barrels per day, respectively).

However, it is incorrect to talk about a nearly a hundred years’ record, as the United States resumed oil exports, banned for over 40 years, only at the beginning of 2016.

The States imposed the oil export embargo back in 1973, when the Gulf countries had declared termination of oil deliveries to countries that supported Israel during the so-called Yom Kippur War. This was done to protect the domestic US market, which then could have found itself in a situation of sharp shortage of fuel.

Since then, the situation has changed dramatically. Due to the "shale revolution" in recent years, the United States dramatically increased their own oil production. It’s not about a possible deficit, but a very real threat of surplus oil production.

Last year, US President Barack Obama stated that he would impose veto on lifting of the embargo. The latter was actively supported by the US oil companies seeking to minimize damage from the fall in oil prices by increasing supply. However in mid-December, the American president has softened his attitude towards oil producers. In particular, Obama signed the draft budget for 2016, which provides for the supply of oil abroad.

The United States is not planning to completely give up an opportunity to stop the supply from abroad. President still has the right to ban the export on condition in case of emergency or if the fuel shortages and rising prices would threaten the US national security.

At the same time, the United States’ own reserves and oil production is being reduced. According to the Energy Information Administration at the US Department of Energy, the stocks fell by 2.2 million barrels for the week ending July 1 (they are down for the seventh week in a row), production fell to 194 th. barrels per day to 8.428 million barrels.

However, prerequisites for the growth of production in America have already appeared. According to Baker Hughes, number of drilling rigs in the United States rose by 2.4% (10 units) and amounted to 431 unit only for the week ended July 1. 

A month ago, there were 408 drilling rigs in the United States. The current number is not comparable to the maximum, which was reached in the autumn of 2014 - 1.6 thousand, yet there is a tendency to recovery.

The fact is that the price of oil at around $ 50 per barrel considered a milestone of American oil production. The price triggers production growth and drilling starts again. Thus, Head of the US Department of Energy Ernest Moniz said that production at some shale projects began to resume at this price. He, however, stressed that "many was drilling when it was even $ 30 per barrel." 

source: reuters.com






Science & Technology

NASA’s Mars Mission To Make Use Of Cold War-Era Atomic Rockets

Israel Completes Mars Habitat Simulation Experiment

Just $24 Earned By Hackers From The Huge Cryptojacking Campaign Conducted Last Week

New Molecule That Quickly Fights Cancer Cells Identified By Swedish Scientists

The U.K.’s Health Sector To Integrate Israeli ‘Digital Health’ Technology

Cryptocurrency Mining Malware Infects Government Websites In Multiple Countries All Across The World

New Research Into Space Settlement And Space Habitation Will Be Supported By Seed Grants Launched By UAE

NASA Confirms Mystery Satellite To Be Its IMAGE Satellite

Facebook To Put A Ban On Cryptocurrencies Ads

Study Show An Early Sign For Alzheimer's Is Sleep Disruption

World Politics

World & Politics

Australia To Welcome Britain On The Latter’s Interest In Joining TPP

South African President Zuma Finally Resigns, New President To Be Elected Soon

13 countries with the best healthcare system

France is coming closer to Iran

India-Russia Develops Supersonic Missile Which Could Raise Concerns In China

Yet another serious political risk for Europe: Italian elections coming soon

Seven Weeks Time Period , Says Theresa May, For Agreement On Brexit Transition Deal

Germany on the brink of political chaos