U.S. crude exports are poised to climb to a record in September as oil traders including Trafigura Group Pte. take advantage of a widening price difference between the Brent and West Texas Intermediate benchmarks and cheap transportation costs.
Trafigura plans to move 5 million to 7 million barrels of crude from the U.S. to Europe this month and next, with the bulk of the cargoes loading in September, Ben Luckock, the company’s global head of crude oil trading, said in an e-mail. Most of the crude will be Eagle Ford or Midland from Texas or U.S. sweet blends, he said.
The company has booked three vessels to ship about 2 million barrels of crude to Europe from Texas and Louisiana, according to three people familiar with the shipments who declined to be identified because the matter is private. Two are Aframax-sized tankers, which can typically move 500,000 to 700,000 of crude each. The third is a larger Suezmax tanker, the people said.
“We believe September will be a new record month for USA crude oil exports,” Luckock said in the e-mail. “Trafigura is moving in excess of 10 Aframax-size parcels of USA domestic crude oil to Europe loading across August and September, with the majority in September.”
The Aframax ACE is expected to arrive around Sept. 6 in Rotterdam after loading from Buckeye Partners’ terminal in Corpus Christi, Texas, according to ship tracking data compiled by Bloomberg. The Suezmax Minerva Symphony is estimated to arrive around Sept. 7 at Milford Haven in the U.K. after loading from the Enterprise Oiltanking terminal in Houston. A third vessel, the Aframax Adygeya, is heading to the oil terminal in St. James, Louisiana, based on Bloomberg data. Its destination is unknown.
“Shipping U.S. crude to Rotterdam would cost about 80 cents a barrel aboard a Suezmax,” said Stefanos Kazantis, senior shipping and finance adviser at ship brokers McQuilling Partners in New York. “Given the overall weakness in the crude tanker markets over the last month, we estimate that the same cargo would have cost charterers anywhere from 20 percent to 30 percent more in July.”
A Trafigura spokeswoman declined to comment on the specific shipments.
West Texas Intermediate’s discount to Brent widened 11 cents Tuesday to $1.86 a barrel. It reached $2.33 on Aug. 17, the steepest discount since December.
“This arbitrage has been facilitated by our significant logistics infrastructure and large customer base combined with low freight rates and weak WTI/Brent,” Trafigura’s Luckock said.