US oil exports to Europe rebound as OPEC+ cuts supply

MOSCOW/NEW YORK: The United States has increased oil supply to Europe in July for the first month since May, making up for output cuts from OPEC+ members, according to traders and Refinitiv Eikon data.

US crude supply to Europe reached nearly 31 million barrels in July, according to Refinitiv Eikon data as of July 24. With crude prices back above $40 a barrel, US producers have rushed to claim market share while the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, is still cutting supply drastically.

US supply to Europe peaked at 35 million barrels in April before falling to 24 million and 27 million in May and June, respectively. European refiners are buying cheaper US crude rather than local grades that are more expensive due to OPEC+ limiting supply.

Oil producers in the US have boosted volumes, after curbing shale well output in the spring when prices collapsed. Producers did not shut wells outright, so output rebounded quickly, and those barrels are flooding the market, traders said. US Gulf Coast crude inventories hit a record this month, US Energy Department data shows.

The premium for WTI delivered to East Houston, one of the most popular export grades, is down due to record Gulf stocks, making it more attractive to European buyers.

Russian Urals crude prices are down due to rising US supply, traders said. Premiums for July cargoes fell to 30 to 40 cents per barrel by mid-month, down from a record of $3 per barrel in late June.

Traders are offering more US oil for delivery in August and September, three traders with European refineries told Reuters.

Some US exporters, however, say they are concerned that margins to ship to Europe will sag if coronavirus cases flare up again and as fuel inventories remain elevated. Northwest European gasoline refining margins this week rose to around $3 per barrel.