U.S. Oil Exports Are Up (And OPEC is Down)
Even as oil prices falls, exports grow
“If energy is going to be used as a weapon, we need to have the largest arsenal.”
Former Texas governor Rick Perry said this at a conference in Houston in 2015.
He was referencing the clout of OPEC within the global oil trade and the fact that the U.S. was beholden to the whims of the group.
The U.S. was tight in an OPEC choke-hold and there wasn’t much light at the end of the tunnel…
Two years ago we wrote about the (tiny) hope that the U.S. would lift the ban on crude oil exports…
Many thought it was a fool’s hope.
But in December of 2015 the ban was lifted…
And U.S. shale producers jumped in feet first.
Since then oil has been on a rollercoaster of ups and downs.
Last week, crude prices reached a seven-month low, currently sitting just below $43. For months, we’ve seen oil trade around $50 per barrel, desperate for support.
The question is, who can afford to produce under such low prices?
But the U.S.? That’s another story.
The U.S. actually increased rig counts last week, to 941 active oil and gas rigs (up more than 500 from this time last year), while boosting production to more than 9.33 million barrels of oil a day.
The cost to build and operate wells in the oil-rich U.S. shale basins has decreased by millions over the past few years.
This means that certain U.S. shale producers can make a profit when crude prices are trading between $40-50 per barrel.
Just look at this chart:
The U.S. has nearly doubled oil production in the past nine years and is producing more than any other country.
From 2010 to 2016 U.S. exports more than doubled, with production in 2016 at 5.2 million b/d.
Forbes writes, “Since late last year, China, now the world's 2nd largest but incrementally the most critical oil consumer, has ramped up imports from the U.S… Mexico is now taking about 60% of U.S. gasoline. Mexico's crude output has dropped about 33% since 2004…”
Oil is necessary.
The U.S. can produce it, and make money from low prices.
That’s why the future of U.S. oil exports looks so bright.
Until next time,
A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.
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