U. S. refineries are producing more than ever before, seeking to meet growing demand, but mainly from overseas, Reuters reported Wednesday.
Last year, the US became the world's largest net exporter of oil products, a natural result of the surge in US crude oil production since the shale revolution began in 2010. There has been a fundamental shift in the traditional role of the United States in the global oil market after it was the world's leading importer and consumer of oil products.
Us net exports of refined oil products are expected to hit another record high in 2017, making the foreign refined oil market more and more important to the future growth prospects and profit margins of US refiners.
Shale oil producers provide refineries with a rich and cheap supply of domestic crude oil, giving them the raw materials they need to produce internationally competitive oil products.
In 2016, the United States exported 2.5 million barrels of oil products per day to foreign markets, a record high. According to US government data, 10 years ago, the net import of the United States was as high as 2.3 million barrels per day.
Strong exports have boosted profit margins for large US refiners such as Marathon Petroleum and Valero and made up for weak growth in US energy demand this year.
Now, the Trump administration is seeking to deregulate oil and gas production to further take advantage of increased US exports for international political gain-a policy Mr Trump calls "energy-led".
The sharp rise in U. S. crude oil production has undermined efforts by the Organization of Petroleum Exporting countries to cut production to ease global oversupply.
The United States is still a big importer of crude oil-often alternating with China as the top importer of crude oil-but US refiners process much of their imported crude oil into aviation fuel, diesel and gasoline before exporting it.
The US is playing a growing role in meeting car fuel demand in countries such as Mexico and Brazil, which are likely to increase demand for US fuel because of refinery shutdowns and high production costs.
Us oil products are also exported as far away as Asia, and diesel exports to Europe rose to a nearly two-year high in June, traders said.
Traditionally, oil traders, refiners and investors regard US fuel demand as one of the main measures to predict international crude oil supply and price trends. Today, they increasingly make predictions by observing changes in foreign demand for American fuel.
"globally, there is an increase in demand for all of our products, so our focus will shift overseas," said Joe Gorder, chief executive of Valero Energy, Texas.
By contrast, he predicts that US gasoline demand will fall "slightly" over the next decade.
Us gasoline demand hit a record high in 2016 as lower prices spurred consumption, but demand has been flat this year. The increase in fuel efficiency of cars is expected to limit future growth in domestic demand.
Latin American buyer
Us oil products fill the gap in countries such as Mexico and Venezuela, where refineries are underproduced. Oil exports from the United States have also entered the Brazilian market by falling below local prices.
Latin America imported nearly 2.5 million barrels per day of fuel from the United States in the first quarter, compared with 2.32 million barrels per day in 2016. The increase is driven by imports from Mexico, Brazil, Peru, Venezuela and Central American countries, according to the American Energy Information Association (EIA).
Mexico, already the largest export market for US gasoline and diesel, is trying to import more oil than usual in July and August to fill the supply gap left by a fire at the country's largest refinery last month.
In recession-plagued Venezuela, the country's largest refinery this month cut its operating rate to less than half its capacity of 955000 b / d, requiring PDVSA, the state oil company, to import more fuel to meet domestic demand.
Among them, Mexico and Venezuela have recently said they will buy nearly 19 million additional barrels in the second half of this year, mainly from the United States-a figure suggesting that US exports this year will exceed last year's record levels.
Net exports of US transport fuel are likely to rise 8.8 per cent this year, according to PIRA Energy, an analyst and forecasting agency owned by Sipp Global Platts.
In Brazil, fuel dealers have begun to buy more imported fuel from the United States because it is cheaper than the products of Brazil's national oil company Petrobras.
Outside the Americas
Exports from US refineries to Europe and Asia also increased.
Us diesel exports to Europe rose to nearly 500000 b / d in June, well above levels rarely exceeding 370000 b / d since July 2015, according to traders.
U.S. exports of distillate oil to the world, including diesel, hit a record high in June, according to ClipperData, a research firm that tracks global oil flows.
Oil exports to several Asian countries, including India, Japan and South Korea, reached record highs in 2016; China imported a record 303000 barrels per day of refined oil from the United States in February.
Nicole Leonard, a senior project consultant at Platts Analytics Oil & Gas Consulting, said US refineries could play an important role in meeting growing demand in Asia.
Analysts and traders expect US refined oil exports to continue to grow, even as competition from large exporters from the Middle East, Europe and India intensifies.
Sandy Fielden, director of oil and oil products research at Morningstar Commodities Research, said the challenges faced by refineries in neighboring countries supported demand for US oil products.
"it seems impossible for these Latin American countries to eliminate their refining problems overnight. "he said.