| HOUSTON/NEW YORK
HOUSTON/NEW YORK May 17 Oil tankers carrying
roughly 2.5 million barrels of U.S. crude are currently en route
to Asia, trade sources said on Wednesday, as U.S. producers take
advantage of favorable prices to ship to Asia while OPEC ponders
further supply cuts next week.
At least three vessels capable of moving 1 million barrels
of crude each are sending domestic oil to Asian refiners, as
well as some Mexican crude, several sources said.
OPEC members meet next week to discuss extending a global
supply cut, but the possibility of U.S. supply eating into their
market share will be a challenge. While member countries have
largely restrained their supply, they have remained intensely
focused on keeping market share with Asian refiners. But
relatively cheap U.S. crude has buoyed exports to Asia.
Traders expect that May U.S. crude exports could reach
around 1 million barrels per day, with a sizable portion of that
going to Asia. Last week, U.S. crude exports touched 1.09
million bpd, the third highest on record, according to U.S.
government data. If numbers remain elevated, they could surpass
the record 1.2 million bpd seen in February.
"We expect that momentum to continue when (Dakota Access
Pipeline) opens and as more Permian production hits Corpus
Christi docks," said Sandy Fielden, director of oil and products
research at Morningstar, of the exports.
Increasing traffic to Asia is possible because of a widening
premium for Brent over U.S. crude, which touched a six-week high
on Wednesday WTCLc1-LCOc1.
"Early May spot prices showed both Brent and Dubai trading
at around a $3 per barrel premium to Brent and WTI Cushing,
which is an open window," said Fielden.
Meanwhile, prompt Brent crude's premium to Dubai, also
called the exchange of futures for swap DUB-EFS-1M narrowed to
below $1 a barrel last month, hitting 46 cents a barrel on April
27, its tightest since 2010.
That spread has been tightening since OPEC agreed to
production cuts in November, making U.S. cargoes more
competitive. An extension to OPEC cuts may further benefit U.S.
producers and exporters.
The Sydney Spirit, a Bahamas-flagged vessel, is delivering
Alaskan North Slope (ANS) crude to Asia, according to two
sources and Reuters vessel tracking data. Half of the crude
onboard the vessel is unsold, one of the sources said.
Vessel tracking data available via Eikon system lists the
ship as "for orders," which indicates there may not be a buyer
for at least some of the crude. The ship is currently on its way
Meanwhile, Japanese refiner Cosmo Energy loaded the Almi
Star, a Aframax vessel carrying around 600,000 barrels of crude,
with offshore Southern Green Canyon crude and Domestic Sweet
Blend (DSW) outside of Houston, before picking up an additional
300,000 barrels of Maya crude at Dos Bocas, Mexico, two sources
familiar with the matter said.
That ship will move through the Panama Canal, and then
transfer crude to a larger Suezmax vessel loaded with 400,000
barrels of Mexican Maya crude for a voyage to Asia, the sources
The Montesperanza, another Suezmax, is headed to Singapore
after loading at the Galveston Offshore Lightering Area. The
ship is controlled by French energy firm Total SA, and
the crude on it is expected to go to Japan, two sources said.
(Reporting by Liz Hampton in Houston and Catherine Ngai in New
York; Editing by Lisa Shumaker)