The consistent slide in US commercial crude oil inventories over 2017 was one of the most bullish indicators that led to the recent oil price rally. Strong US job numbers at the start of 2018 have fueled sentiment that the trend will continue, as consumer demand may provide some off-take of refinery production, but equally important are US exports that will keep product off the domestic market and accordingly keep prices high. Navarik Data forecasts that this will indeed occur. Our proprietary data products of confirmed and nominated volumes shows that the projected refined product exports out of the US Gulf Coast through to the end of January are up some 13% over this time last year and 2% this time last month. Note that these figures are not model-based, but in fact based on verified barrels either on board or scheduled to be loaded.
We expect that if these export levels hold, a strong case for a bullish US domestic market outlook could be made. This would be particularly true for refined products, but could also hold for US crude under certain assumptions. In order for the effects to translate this far upstream, refinery utilization rates would have to hold off too much of a slide going into spring turnaround season in order to reliably burn through commercial crude stocks, and how soon booming rig counts translate into supply should also be monitored. But with the Gulf Coast being the dominant US export region, the longer these outflows level hold the greater is the case for continued price support.
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