U.S. petroleum product exports rose slightly in the first half of 2019
In the first half of 2019, the United States exported an average of 5.47 million barrels per day (b/d) of petroleum products, an increase of 19,000 b/d (0.3%) from the first half of 2018 and the slowest year-over-year growth rate for any half year in 13 years. Two factors that likely contributed to lower exports were lower U.S. refinery runs in the first half of 2019 compared with the first half of 2018 and slowing global economic growth, which is limiting demand for petroleum products. In the first half of 2019, increased exports of propane and distillate offset decreased exports of all other petroleum products.
Distillate remained the largest U.S. petroleum product export in the first half of 2019, averaging 1.3 million b/d, an increase of 60,000 b/d (5%) compared with the first half of 2018. Distillate has many uses, including transportation, manufacturing, agriculture, residential, and commercial activities.
Mexico was the largest destination for U.S. distillate exports during the first half of 2019, receiving 290,000 b/d, or 22% of total U.S. distillate exports. Aside from Mexico, U.S. distillate exports go mostly to Central and South America, including Brazil (13%), Chile (7%), and Peru (5%). U.S. distillate exports also go to Europe, mostly to the Netherlands (4%), which is a transshipment country for some of the U.S. distillate volumes.
Propane was the second-largest U.S. petroleum product export in the first half of 2019, at 1.03 million b/d, an increase of 142,000 b/d (16%) from the first half of 2018. Propane is used as a space heating and transportation fuel and as a petrochemical feedstock. Most U.S. exports of propane are destined for use as a petrochemical feedstock, mainly at facilities in Asia and Europe.
U.S. residual fuel exports declined the most between the first half of 2019 and the first half of 2018, falling by 74,000 b/d to average 258,000 b/d. In the first half of 2018, Singapore was the top destination for U.S. residual fuel exports, most likely to supply Singapore’s marine bunkering market. However, in the first half of 2019, trade press reported that Singapore’s bunker market was preparing for new international regulations that limit the sulfur content of marine fuels by drawing down higher sulfur residual inventories to make room for inventories that are lower in sulfur. As a result, average U.S. exports of residual fuel oil to Singapore decreased 68,000 b/d (80%) in the first half of 2019 compared with the first half of 2018.
EIA forecasts that continued growth in petroleum product exports, albeit slower than in previous years, combined with increasing U.S. crude oil exports, will result in the United States becoming a total petroleum net exporter. The U.S. Energy Information Administration’s (EIA) October 2019 Short-Term Energy Outlook forecasts this change to occur in the fourth quarter of 2019.
Principal contributor: Mason Hamilton