U.S. fuel imports fell to a 15-year seasonal low as refineries processed increasing domestic crude output, moving the nation closer to energy independence.
Deliveries slid 653,000 barrels a day to 1.68 million in the week ended June 6, the fewest for the period since 1999, the Energy Information Administration data showed today. The 28 percent drop was the biggest decline since the week ended June 18, 2013. Fuel imports peaked at 4.97 million barrels a day in October 2005.
“There’s a change in the dynamic,” said Phil Flynn, a senior market analyst at Price Futures Group in Chicago. “We’re not going to stop importing products but the overall number should move lower. We’re turning into a hub where products are both imported and exported based on price.”
Shipments to the U.S. from abroad have dropped as the shale boom provided refiners with an ample supply of cheaper domestic crude to make fuel. West Texas Intermediate, the U.S. benchmark crude, has traded at an average discount of $12 to Brent oil from the North Sea over the past four years. WTI traded at an average premium of more than $1 to the European grade from 1988 to 2008.
“Brent traded at a discount to WTI, which encouraged East Coast refineries to process imported barrels,” Flynn said. “This is no longer the case.”
U.S. crude output rose 77,000 barrels a day to 8.46 million last week, the EIA said. Production reached 8.47 million barrels a day in the week ended May 23, the most since October 1986, according to the EIA, the Energy Department’s statistical arm.
The combination of horizontal drilling and hydraulic fracturing, or fracking, has unlocked supplies from shale formations in the central U.S., including the Bakken in North Dakota and the Eagle Ford in Texas.
Refineries in the U.S. have operated at an average 88.4 percent of capacity so far this year, up from 85.5 percent during the same period a year earlier, EIA data show.
The U.S. met 87 percent of its energy needs in 2013 and 90 percent in December, the most since March 1985, according to the EIA.
WTI for July delivery slipped 8 cents to $104.27 a barrel at 1:12 p.m. on the New York Mercantile Exchange. Brent for July settlement climbed 34 cents, or 0.3 percent, to $109.86 a barrel on the London-based ICE Futures Europe exchange.
To contact the reporter on this story: Mark Shenk in New York at firstname.lastname@example.org
To contact the editors responsible for this story: David Marino at email@example.com Bill Banker