NEWS： US exports to Asia slowed down
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Traders said U.S. crude oil exports to Asia are expected to slow in the coming weeks as the arbitrage window for Asian crude oil exports closed again in the past month as U.S. crude oil grades in the Gulf of Mexico rose.
The quality of crude oil in the Gulf of Mexico has risen in the past few weeks as the discount of U.S. crude oil has increased over that of Brent crude oil. This week, the U.S. asked Iranian oil buyers to stop buying Iranian oil by May 1, or face sanctions, after which the price gap hit its widest level in a month, boosting the quality of the crude oil.
The expansion of U.S. crude oil over Brent crude usually supports the Gulf of Mexico crude grade, because it makes the grade related to U.S. crude oil lower than that related to Brent crude oil for foreign buyers.
However, market sources said that recent gains had pushed exports of WTI Houston crude oil (also known as WTI MEH) to their highest level in more than a month, reducing export earnings to Asia.
WTI Houston crude oil on Wednesday was $7 a barrel higher than the benchmark crude oil futures price, the broadest level since March 15.
"The arbitrage window has barely opened, and the arbitrage window to Asia has often closed in the past few weeks," said a source from a major U.S. exporter of crude oil, adding that more crude oil could be sent to Europe.
U.S. crude oil arrived in Asia in May hit a record high of 38.1 million barrels, according to data from Lufford Eikon, but the crude oil was shipped in the first few months, when oil prices were more favorable for U.S. sellers. So far, about 5.3 million barrels of crude oil are expected to arrive in June.
Looking ahead, traders expect China's import activity to increase. China's crude oil imports to the United States have been suspended for months under the threat of tariffs, but as the two countries try to reach a trade agreement, China has resumed purchasing U.S. crude oil.
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