Seaborne shipments to the United States were 286,000 bpd in April, roughly in line with March's 283,000 bpd but down from the record of 431,000 bpd in September last year.
SEATTLE (Oil Monster): If there is a law of unintended consequences, then a good example is how commodity markets are adjusting to both the realities and the perceived threats of the tariff war launched by U.S. President Donald Trump.
Trump's trade and tariff measures have forced commodity producers, traders and buyers to re-think long-established relationships, adapt to emerging realities and try to predict what may happen.
What is becoming clear is that commodity markets are adjusting not only to actual measures imposed by the Trump administration, but also to the possibility of future actions, which has created a desire to limit exposure to the United States.
An example of this is seaborne exports of crude oil from Canada, which have shifted away from the United States and towards China, even though Trump backed away from his initial plan to impose a 10% tariff on energy imports from Canada.
For the first time ever Canada exported more seaborne crude to China in April than it did to the United States, showing how market dynamics can move amid the uncertainty created by Trump's trade war.
Canada's seaborne exports of crude to China were 299,000 barrels per day (bpd) in April, up from 277,000 bpd in March, according to data compiled by commodity analysts Kpler.
Seaborne shipments to the United States were 286,000 bpd in April, roughly in line with March's 283,000 bpd but down from the record of 431,000 bpd in September last year.
To be sure, the above numbers reflect only oil moved by vessels and don't account for the far larger flows of Canadian crude into the United States via pipeline and rail.
Canada sends about 4 million bpd of crude to its southern neighbour via pipelines, and while the volumes have been steady, prices have shifted in Canada's favour, reflecting another unintended consequence of Trump's often chaotic policies.
The discount of Western Canadian Select crude to U.S. West Texas Intermediate has narrowed to the lowest in about 4-1/2 years at just over $9 a barrel, dropping from levels closer to $30 as recently as November.
This reflects another dynamic that Trump probably didn't expect, as his sanctions on Venezuelan oil, which like Canadian crude is heavy, reduced the amount of this grade available to U.S. refiners.
This means that Canadian crude is more in demand in the United States, and U.S. refiners are having to pay more.
The rising price for Canadian crude brings into question the view that Canada was far more dependent on the United States than vice versa.
It now seems that the United States is actually quite dependent on Canadian crude, especially if Trump has limited the suitable alternatives with sanctions.
Courtesy: www.reuters.com
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