China imported 8.08 million barrels of U.S. light sweet crude, nearly quadrupling its January purchases, according to data released by the U.S. Census Bureau Tuesday. U.S. crude shipments totaled 31.2 million barrels, reaching the highest level on record. Canada, the U.S.’s largest trade partner, imported 6.84 million barrels, down 20 percent from a month earlier.
The surge in U.S. shipments comes as the Organization of Petroleum Exporting Countries trims output in an effort to end a glut that battered the economies of global energy exporters. U.S. crude stockpiles climbed to 534 million barrels in the latest government data, the highest level going back to 1982. In March, crude prices slumped the most since July amid concerns about global stockpiles.
“The U.S. is a larger exporter of crude than many OPEC countries,” John Auers, executive vice president at energy consultant Turner Mason & Co. in Dallas, said by phone. “That China is buying more means that the U.S. has become a larger player in the global crude export market.”
U.S. crude exports in February jumped 35 percent from a month earlier, according to the U.S. Energy Information Administration. While shipments are expected stay above 2016 levels, the boost was likely aided by seasonal maintenance at U.S. Gulf refineries, according to Auers. Also, the production cuts made by OPEC countries made Dubai, an Asian benchmark, more expensive compared to the U.S. counterpart.
This year, West Texas Intermediate has averaged 49 cents below Dubai crude, a lower-quality grade, based on front-month swaps data from broker PVM Oil Associates Ltd.
“A very strong WTI-Dubai spread enabled opening in arbitrage opportunities to Asia at a time when there were lots of turnarounds going on in the U.S. Gulf in February,” Dominic Haywood, a London-based analyst for Energy Aspects Ltd. said in a phone interview.
Singapore imported 2.03 million barrels from the U.S., while countries including Curacao, Italy, Japan, South Korea and the Netherlands bought in excess of 1 million barrels each, government data show. They include condensate derived from natural gas.