Make America(n Oil Exports) Great Again
U.S. crude and petroleum product exports are surging to record levels
Last week, the U.S. exported 12.744 million barrels per day of crude oil and petroleum products. This was the highest weekly export level in the 35+ years that the EIA has tracked the data.
This may only be the beginning of the U.S. export boom, as reports indicate that an unusually large number of oil tankers are now heading to the U.S. to load crude amid the largest oil market supply disruption in history:
The immediate result of these exports is large U.S. crude and product inventory declines, which have begun showing up in the data. Last week, total U.S. inventories fell by 13.1 million barrels, the first large U.S. draw since the Strait of Hormuz disruption - potentially an early sign that onshore OECD inventories are beginning to tighten. These draws matter because U.S. inventory levels have historically tracked oil prices closely:
If exports continue rising, how fast could inventories fall? If oil inventories decline rapidly, what will that do to oil prices? And what could that mean for energy equities from here?
I explore these fundamental oil market questions below. And then I consider the implications for energy equities, particularly the investment ideas I’ve shared here on Bison Insights.
These ideas have done quite well despite the recent pullback, both on an absolute basis and versus the XOP oil & gas producer ETF and the broader stock market:
Disclaimer: This is for informational and educational purposes only. This is not an offer, solicitation, or investment recommendation. Please consult an advisor and do your own diligence. Past performance may not be indicative.
