Last week, the U.S. exported almost two million barrels of crude oil a day. This is a new record high since 1993, according to compiled government data. The high volume of crude exports has reduced the price of oil. This new trend has created fear of a global oversupply.
The cause of this record high is Hurricane Harvey.
It was one of the most devastating hurricanes in U.S. history that mostly affected the Southeast Coast, and hit Texas refiners big time. Since then, the industry has been trying to recover from Harvey, and U.S. crude prices took a hit, too. Gulf Coast refiners had to shut down production for weeks. This forced oil producers to turn to markets overseas to sell their oil.
Lower crude supply has reduced the U.S. West Texas Intermediate crude (WTI) prices down to $49.98 a barrel, while Brent (North Sea oil) increased to $55.80 at the end of the week – that’s 1.98 million barrels exported a day.
Strategists are worried that increasing crude exports will affect other oil-producing countries’ efforts to reduce their oil supply.
After weeks of shutdowns due to Hurricane Harvey, Texas refiners have already started using more crude oil in their production.
Experts describe the current situation as “temporary” and believe that U.S. crude exports will diminish eventually, when the Gulf Coast industry returns to normal. Nobody believes that U.S. markets can keep the 1.5 – 2 million barrels a day pace of export.
The current situation shows that the U.S. crude production, and the export market, can be vastly affected by another hurricane if it were to hit other oil-producing states. The very thought of another devastating hurricane makes a lot of people around the world very nervous.
According to weather reports, a new tropical hurricane might hit the Gulf Coast area, again.
Tropical Storm Nate is currently affecting Nicaragua now, and could be heavy, with up to 30 inches of rain, as it gets closer to the U.S. Many people are wondering “Is it going to be another Harvey?” Now with Tropical Storm Nate heading up the coast, those fears may become a reality.
