Thanks to the booming shale production, U.S. light oil exports have increased, taking market shares out of the lighter grades that Saudi Arabia and its fellow OPEC members are exporting to Asia.
Moreover, increased crude oil production in the U.S. has also resulted in higher oil product exports which, combined with higher Chinese refined product exports, have created an oversupply of products in Asia, crashing refining margins earlier in December.
U.S. light crude oil exports to Asia have also grown and even with China shunning American crude, U.S. sales to OPEC’s key market Asia have held relatively steady since August this year, according to data from Kpler compiled by Bloomberg.
As OPEC is getting ready for another round of production cuts beginning January, Saudi Arabia for example is hell-bent on keeping its market share in Asia and has recently slashed the January prices of all its grades going to Asia, while it raised the prices for all grades bound for the U.S., Northwest Europe, and the Mediterranean. Saudi Aramco’s deepest cuts in Asian pricing were for the Super Light and Extra Light grades, slashed by US$2 and $1.50 a barrel from December’s prices, respectively. The official selling prices (OSPs) of Arab Light, Medium, and Heavy were also cut, by between $0.40 and $1.00 a barrel.
The deepest cuts in the lighter grades reflect Saudi Arabia’s effort to keep its market share in Asia as competition from U.S. light oil intensifies, according to analysts.
In early December, the gasoline refining margin at the Singapore hub, viewed as a benchmark for Asia, slumped to a loss and to the lowest level against Brent prices since November 2011. Loss-making gasoline margins weighed on Asia’s overall refining profits, which hit in early December their lowest since August 2016, despite crumbling crude oil prices, according to data from Refinitiv Eikon, as carried by Reuters.
China is reportedly raising its fuel export quota for 2019 by 13 percent, which could additionally weigh on product oversupply.
According to data compiled by Bloomberg, this year average monthly U.S. exports to Asia of light distillates—including gasoline and naphtha—have been nearly triple the export levels over the past two years.
More at: https://oilprice.com/Energy/Crude-Oi...e-In-Asia.html
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