US Oil Production Booms but not without Obstacles


Car Shipping News

Cartran.net

Oil tanker- Cartran.net-shipping news

Obstacles in US oil exporting policy is behind much of the boom times that the product tanker market is enjoying since the start of the year. According to a recent analysis from Poten & Partners, “with United States crude oil production rising to levels unseen in 22 years, the US must find consumers with whom they can place this excess oil. However, the US cannot export any of this crude oil with the exception of limited quantities to Canada due to self-imposed regulatory constraints. Thus the US is left to refine much of this crude and then export it, causing an increase in product tanker movement ex-United States Gulf (USG) to the South American, Central American, and West African (WAF) zones. Although the US oil surge is having a positive effect on US product tanker movement, it is hurting the already weak European refining and product tanker markets, and could prove to have longer-term negative effects on European refiners if current conditions persist”, Poten & Partners said in its report.
According to the analyst, “the implementation of new drilling methods in so-called “tight oil” formations has increased production for upstream companies in the middle of the US. These changes have created a new dynamic within the US that shows the country is becoming less reliant on foreign oil as crude imports decrease and product exports increase.
With United States crude oil production rising to levels unseen in 22 years, the US must find consumers with whom they can place this excess oil. However, the US cannot export any of this crude oil with the exception of limited quantities to Canada due to self-imposed regulatory constraints. Thus the US is left to refine much of this crude and then export it, causing an increase in product tanker movement ex-United States Gulf (USG) to the South American, Central American, and West African (WAF) zones. Although the US oil surge is having a positive effect on US product tanker movement, it is hurting the already weak European refining and product tanker markets, and could prove to have longer-term negative effects on European refiners if current conditions persist” Poten noted.
It added that “while Africa is forecasted to see refinery capacity increases over the next 5 years, the changes are expected to be negligible, meaning that it will still need to source refined products from places such as Europe and the US. Furthermore, there is hope that macroeconomic growth can be sustained in some parts of the continent, which would help drive demand for crude oil and refined products.
European refineries, dealing with poor general economic conditions, now have to compete with the US in what has been a strong market (WAF). After already experiencing some refinery closures this year and with others struggling to stay open, Europe may even fall below forecasted levels of refining capacity if market conditions persist. And while European refiners find themselves trying to adapt to other markets by increasing exports to South America to make up for reduction in WAF trading, they could just as easily find themselves displaced by a strengthening US refining sector there as well.
While this dynamic has helped support clean tanker demand, and in turn, rates, the situation is still fluid enough that it is tough to pick specific losers. In any case, it seems likely that US refiners will continue to see higher export volumes and be a competitive force in new regions” Poten concluded.
Nikos Roussanoglou,

Ship Cars | Ship Vehicles | Ship trucks | Ship Heavy Equipment | Ship Boats | Car Shipping Company | Car Shipping Service | Auto Transport | Car Transport | How to Ship a Car Overseas | Car Shipping to Spain | Car Shipping to Kuwait |

Website Pin Facebook Twitter Myspace Friendfeed Technorati del.icio.us Digg Google StumbleUpon Premium Responsive

Leave a Reply