Drop In Shale Production
Forces US To Resume Crude
Import
Blessing Anaro , By ISAIAH BENJAMIN,
Salihu Abubakar
— Apr 4, 2016 3:15 am | Leave a
comment
Hope has risen for Nigeria’s crude oil
business as the drop in shale production
has forced United States (US) to resume
crude oil imports.
With this development, the US is now a
big importer of crude oil again after a very
sharp fall in its production.
Bloomberg reports that US oil production
has fallen by about 600, 000 barrels per
day since peaking in 2015, and imports
have filled the gap as the American
industry is hoarding foreign crude.
According to the US Department of
Energy, earlier in 2014, Nigeria oil sales to
the US dropped to a trickle of about
100,000 barrels per day but completely
stopped in July.
Nigeria did not export a single barrel of
crude to US-based refiners in July 2014
for the first time since records started in
1973. Preliminary data suggest the trend
continued in August and September.
However, at its peak in February 2006,
the US imported 1.3million barrels per day
from Nigeria. By 2012, Nigeria was
already selling just 500, 000 barrels per
day, but was still one of the top-5
suppliers to the US, alongside Saudi
Arabia, Canada, Mexico and Venezuela.
To be sure, US crude oil imports are
rising for the first time for more than five
years, a sign that Saudi Arabia is winning
its war for market share against shale
producers, according to the US Energy
Information Administration.
US daily crude imports averaged 7.9
million barrels per day over the last 13
weeks, 9.8 per cent higher than the year
before. “That’s not a one-week blip,” Tim
Evans, an energy analyst at Citi Futures,
told Bloomberg. “We’re seeing a
consistent pattern.”
Faster imports were driven by a surge in
oil deliveries from Saudi Arabia, Venezuela
and Nigeria which cleared US customs
over the seven day period. Reported
imports are subject to considerable week
to week variability depending on the
timing of tanker arrivals and customs
clearance, so it is important not to place
too much emphasis on one week’s
figures. But there is no mistaking the
trend. Crude petroleum imports have been
trending higher since the middle of 2015.
Imports are rising thanks to a
combination of strong demand from US
oil refineries and falling domestic oil
production from shale formations.
Crude is also being imported and put into
tank farms. Traders favour storage in the
United States because it is a location of
net consumption and has favourable
banking, legal and physical infrastructure.
US producers, who reaped the benefits of
the shale revolution, no longer enjoy a
steep price advantage over foreign rivals
in selling to domestic refiners. Now
refineries are buying foreign oil to replace
the lost US output—and, along with
traders, are storing much of the less-
expensive imported oil to sell when prices
rise, Bloomberg reported.
The irony of the shale boom, and all the
light crude it unlocked, is that it came
just as US refiners were spending billions
to process heavy oil.
The US is hoarding a lot of the imported
oil. As of March 25, US commercial crude
inventories hit 534 million barrels. That is
near the all-time high in 1929, when US
commercial storage hit 545 million
barrels, as huge oil finds coincided with
the beginning of the Great Depression.
As long as futures prices remain higher
than current ones, the incentive will
remain to pump oil and store it. That
leaves the US stuck in a strange pattern
where “the higher inventories go, the
more downward pressure that puts on
near-term prices, which only increases
the incentive to store it,” says Citi
Futures’ Evans.
The only way to break that cycle is for
interest rates to rise, says Philip Verleger,
an energy consultant and former director
of the office of energy policy at the
Department of the Treasury, which would
increase the financing costs to build
storage tanks. “As long as money is
cheap, it’ll make sense to build storage
tanks in the U.S.”
But there [font=Lucida Sans Unicode][/font]

could be a political cost if the
market share strategy is pushed too far,
in the form of a backlash from the United
States, Reuters’ John Kemp explains.
“The rise in U.S. domestic oil production
and reduction in imports has been hailed
by policymakers from both major parties
as an important achievement,” he says.
“Even if the concept of “energy
independence” is an illusion in an
interconnected oil market and global
economy, rising domestic production has
contributed to an improved sense of
energy security,” he said. “But if the price
war continues to harm domestic oil
producers, it is likely to trigger a political
response at some point.”
leadership.ng/news/514930/drop-shale-production-forces-us-resume-crude-import

Why can't some people leave the oil of SS/SE alone.
Stop putting your miserable hope in oil

As shale availability go down conventional crude oil price is bound to rise and favour Nigeria:
1) As an exporter because there will be a megd market gap.
2) In revenue per barrel sold.
Baba's travel won't be in vain as US and Nigeria are in better diplomatic relationship now.

SUBMARINE:
Why can't some people leave the oil of SS/SE alone.
Stop putting your miserable hope in oil

I don't know what your problem is.
It's not as if you and I benefit directly from the crude oil sale irrespective of our regions.
As an entrepreneur, I just want availability of forex for importers to bring in materials for ease of my production. Shikena!

Is it because of shale production that drop the oil price or because ISIS terrorists is smuggling and selling crude oil to US, Turkey, and Arabs at cheap rate

Very soon, buarri will give them oil from Chad basin.

Obama and his KEEP NIGERIA IN DARKNESS antics. Smh..

gbadexy:

I don't know what your problem is.
It's not as if you and I benefit directly from the crude oil sale irrespective of our regions.
As an entrepreneur, I just want availability of forex for importers to bring in materials for ease of my production. Shikena!

Guy, how is the paint business now ?

Cost of materials..

This is good news to Nigeria

slyzy:
This is good news to Nigeria

Nope it's not. If Only the Economy has already been diversified, then it's a good news.

Greyworld:

Nope it's not. If Only the Economy has already been diversified, then it's a good news.

The economy diversification will be further enhanced by the proceeds from oil sales in high price. Don't u think so?

slyzy:


The economy diversification will be further enhanced by the proceeds from oil sales in high price. Don't u think so?

Yeah, that if and only if this Government is different from the previous ones and by previous ones I mean all government administrations from 1960.

If not just watch how Nigeria will plunge back into total oil reliance, even, begin exploration in Chad basin.

More mismanagement and foreign trips

Greyworld:

Yeah, that if and only if this Government is different from the previous ones and by previous ones I mean all government administrations from 1960.

If not just watch how Nigeria will plunge back into total oil reliance, even, begin exploration in Chad basin.

That is the challenge. We can't trust our govt cos of the pedigree of mismanagement in the past by diff admins. I pray they shouldn't disappoint this time if the price truly goes up.

100Cents:


Guy, how is the paint business now ?

Cost of materials..

My brother, like every other thing now, it's not easy.
Cost of materials has skyrocketed and no one is willing to reduce price so as not to lose market.

US can only do so much!! Dem nor be Messiah!

modath:


Pseudo economist, there is a level US can fight ISIS to & then have no choice but to throw in the towel.

The projection of sub 25$ crude price is no longer happening...

Do small research about shale production & the impact of low oil prices & my other points then let's have a robust argument...

PSA to all anti National Interests zealots hoping for an economic mayhem to justify making huge losses from their political misadventures, "The only way now is UP"

Hope with this breathing space, this present administration will not go the squandering & wasteful ways of the past administration..!!

modath:

US can only do so much!! Dem nor be Messiah!



PSA to all anti National Interests zealots hoping for an economic mayhem to justify making huge losses from their political misadventures, "The only way now is UP"

Hope with this breathing space, this present administration will not go the squandering & wasteful ways of the past administration..!!

Amen.