(EnergyAsia, April 25 2014, Friday) — The US will export a “tidal wave” of refined products over the next two years, but will have trouble finding international demand for its light crude, said consultant ESAI Energy.

Thanks to low feedstock prices brought on by the surge in North American crude oil output, US Gulf Coast refiners are profiting from rising exports of gasoline to Latin America, diesel to Europe, and naphtha and liquefied petroleum gas (LPG) to Asia.

The refiners will be eager to ride the “tidal wave” of US product exports to these markets, predicts ESAI Energy’s newly published two-year Global Fuels Outlook. It expects the US to become a net gasoline exporter in 2015, with PADD II and III helping raise overall US production by 135,000 b/d in 2014 and 110,000 b/d in 2015. At the same time, PADD I imports will fall below 500,000 b/d on a yearly basis.

“Product balances in import markets will increasingly drive margins and temper the traditional influence of US supply-demand fundamentals on prices,” said the company’s analyst John Galante.

“Gasoline deficits in Latin America and West Africa, for example, should have a greater influence on fluctuations in prices in the US Gulf Coast.”

US refiners will help meet global demand for diesel, which ESAI Energy believes will grow by 625,000 b/d in 2015 for its strongest increase since 2011.

But the export outlook for US crude is not as bullish despite the growing chorus from domestic producers demanding they be allowed to ship surplus crude to overseas markets.

“Falling demand for light sweet crude oil outside the US through 2016 will offset the strong growth in US domestic demand for price-advantaged light sweet crude oil,” said ESAI Energy in its newly published two-year Global Refining Outlook.
The developed world will have reduced appetites for light crude oils, the result of years of capacity cutbacks and lower throughputs. Naphtha output from new condensate splitters will compete with production from many simple refiners, which typically process light crude oils.
At the same time, the rise of heavy sour processing capacity in the Middle East will add to global product supplies that will compete for export markets.
“There will not be much room for US light sweet crude in the global market even if the constraint on exports is lifted or liberalised,” said ESAI Energy Principal, Sarah Emerson.