Market Updates: Increasing Oil Exports boost US role as a global price maker.
Current Crude oil production levels have reached historic highs. The nation’s crude oil output remains relatively low in 2019, but it has consistently increased since then. Exports of gas and petroleum are at all-time highs, easily surpassing sales of airplanes, medicines, food, and automobiles abroad. In the past year, Exxon Mobil Corporation’s shares increased by 80%. On the week ending October 21, crude exports reached a new high of 5.1 million barrels per day, according to the U.S. Energy Information Administration. The increase in activity reflects the increased influence of U.S. crude exports on global oil prices, as well as the producers, refiners, and dealers who buy and sell financial instruments to avoid or gain price fluctuations. There are several reasons caused the surge. Reasons like an increase in U.S. crude oil production and increased Europe’s dependence on US imports as a result of the Russian and Ukraine conflicts. (Around 213.1 million barrels in 2022, the highest export number in 5 years)In 2023, daily trade of WTI futures related to Houston and Midland has approximately quadrupled on CME Group compared to the same period a year prior. This increase culminated on February 8, when 57,302 pairs of agreements changed hands.
The price reporting firm Platts replied by contemplating the addition of new oil streams to the basket in order to reflect physical trade and reduce volatility more accurately. U.S. crude from Midland prevailed against oil from the Johan Sverdrup field off the coast of Norway. Already, traders on the Intercontinental Exchange are exchanging a new futures contract based on the price of Midland-quality oil. According to ICE, there are over 16,000 such agreements in effect, which is equivalent to almost 16 million barrels of oil. Clearly, the hike represents a rebound in the economy. The rise in crude oil output would result in the creation of new jobs and a boost to the economies of transportation, manufacturing, and construction, among others. The rise of crude oil production level increased the United States’ geopolitical might by diminishing the influence of nations that control the world’s oil supply. Some investment opportunities we should consider may include ExxonMobil, Chevron, Hess corporations, and Scorpio Tankers Inc.
