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EDITOR’S NOTE: We are not as optimistic as Mr. McQuaid regarding oil’s short-term price movement. Global demand is strong and U.S. demand is surging, and in the near term, geopolitical risk continues to drive price upward as well. Nevertheless, the thrust of this article is spot-on, and part of the bigger picture we’ve predicted and described for over a decade. — RDM
by Darius McQuaid
April 26, 2018
The United States is flooding the European markets with record amounts crude oil as US producers seize on Russia and the Organization of the Petroleum Exporting Countries (OPEC) pact to cut output resulting in soaring oil prices.
US crude oil is seen as the cheaper option as the OPEC-Russia pact begins to bite after agreeing to oil output jointly by 1.8million barrels per day (bpd) help rebalance the market and to help elevate the benchmark Brent prices.
Now, the relatively high prices brought about by that pact, coupled with surging US output, are making it harder to sell Russian, Nigerian and other oil grades in Europe, traders say.
A trader with a Mediterranean refiner, who regularly buys Russian and Caspian Sea crude and has recently started purchasing US oil. He said: “US oil is on offer everywhere. It puts local grades under a lot of pressure.”
In April, US supplies to Europe are set to reach an all-time high of roughly 550,000 barrels per day (bpd), according to the Thomson Reuters Eikon trade flows monitor.
In January-April, US supplies jumped four-fold year-on-year to 6.8 million tons, or 68 large Aframax tankers, according to the same data.
Trade sources said US flows to Europe would keep rising, with US barrels increasingly finding homes in foreign refineries, often at the expense of oil from OPEC or Russia.
In 2017, Europe received roughly seven percent from the US, however this year, the number has nearly doubled to 12 percent according to Reuters data. Top destinations include Britain, Italy and the Netherlands, with traders pointing to large imports by BP, Exxon Mobil and Valero.
Polish refiners PKN Orlen and Grupa Lotos and Norway’s Statoil are sampling US grades, while other new buyers are likely, David Wech of Vienna-based JBC Energy consultancy says.
Following the US lifting its ban on oil exports in 2015 which was brought in by then President Gerald Ford in 1975, US oil slowly started to take place in the European markets.
Ehsan Ul-Haq, director of London-based consultancy Resource Economics said: “European refiners started experimenting with US crude last year. Now, they know more than enough to process this crude.”
US oil gained in popularity, sources said, in part because of the wide gap between West Texas Intermediate, the U.S. benchmark, and dated Brent, which is more expensive and sets the price for most of the world’s crude grades.
This gap, known as the Brent/WTI spread, has averaged $4.46 per barrel this year, nearly twice as high as the year-earlier figure, Reuters data showed.
On Friday (4/20), President Donald Trump accused OPEC of “artificially” inflating their prices:
Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!
— Donald J. Trump (@realDonaldTrump) April 20, 2018
Before Mr. Trump’s tweet, oil was enjoying its highest levels since November 2014 earlier this week with Brent at $74.75 and WTI at $69.56.
Traders now expect Brent to fall rapidly, confidant that Mr. Putin and OPEC’s dream of $100 oil is a fantasy. Call it Trump’s Revenge.
— Trump’s Revenge on OPEC and Russia originally appeared at To The Point News.
Rod is one of our nation’s leading minds. He’s smart, original, and very committed—a combination that one rarely finds.
Rod Martin and [former Howard Dean campaign manager] Joe Trippi are America’s two foremost experts on online politics.
Rod Martin is a Reaganite-Thatcherite conservative…[and] a man who has spent much of his life ministering to and working for the benefit of others. I know Rod as an advocate for freedom, a leader who understands the real changes we need in Washington, and who has the drive and ability to make those changes happen.
Rod Martin is the kind of dynamic leader who has the knowledge, ability and experience to lead us successfully into the 21st Century. His vision for America is compelling.
Rod Martin literally wrote the book on excellence. Humble yet brilliant, a man of love and compassion, with penetrating clarity he illuminates the world around us, and we are both stirred and enlightened.
Rod Martin is a born leader and an outstanding political mind. Anyone who takes him on is going to have a serious fight on their hands.
Rod Martin is a man of uncommon vision and character. Ever since I first worked alongside Rod in the early days of PayPal, I’ve been struck by his powerful vision for the future. Rod understands the intersection of technology, politics and culture in a way that few others do.
Rod Martin wears with uncommon grace an uncanny ability to link his vigorous faith to the practical challenges of both the business world and the political arena. Yet the respect he shows for others carries a warmth and modesty that are both too rare among those who are strong advocates of feisty positions.
America badly needs more leaders who really get the future. We need more Rod Martins.
Rod Martin is a modern day philosopher-statesman. He is a capitalist intellectual, a conservative iconoclast, a gentle adversary and a kind prophet. He inspires us towards a fresh national vision built upon the original founding principles.
Rod Martin is not only effective and efficient, but he is also perceptive, wise and gracious. He gets things done. He is a great friend and a great ally.
Rod is one of the sharpest, most gracious men I know, and one of the most gifted political thinkers today. His ability to analyze issues and communicate thoughtful insights on them have earned him the respect of people across the political spectrum.
I am proud to have been Rod Martin’s friend for a quarter century, and I can tell you that he is one of the finest men and most outstanding leaders in our church and in our country today. He has a knack for turning everything he touches to success.
Rod Martin is a cornucopian entrepreneur and eutropic thinker whose influence radiates through an array of companies, institutions, movements and churches. A renaissance American, he is also a prolific friend of freedom and faith around the globe.
If Rod Martin represents the next generation of leaders, America has nothing to worry about.
A leader and a servant, in public life and in private, Rod Martin strides at the top of his profession, and has nowhere to go but up. He is in the truest sense of the word ‘outstanding’.
Rod Martin is undoubtedly one of the most accomplished thought leaders today. He is a wonderful mentor, a humble role model, and a deep inspiration for the next generation of scientific innovators and entrepreneurs.
Rod’s achievements pale beside his character and his brilliance. He sees what others can’t. He leads when others won’t.
Rod Martin is one of America’s finest young minds.
