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US looks to west Africa for crude as shale supplies drop

US oil refineries appear to be reverting to old suppliers in west Africa as the growth in shale production slows, re-establishing a transatlantic trade in crude cargoes that had slowed during the shale boom, Financial Times reports.

The number of barrels of west African crude shipped to the US is at its highest level in almost two years, as strong refining margins and attractive prices have seen US plants snap up cargoes. This may have thrown a lifeline to producers of light, sweet crude in west Africa such as Nigeria and Angola, who had largely lost access to North American buyers since the surge in output of similar quality oil from shale fields in the US.

A narrowing of the spread between the price of Brent, the global oil marker, and WTI, the US oil benchmark, is said to have helped bring shipments to East Coast refineries from across the Atlantic Ocean. Transportation costs from west Africa are as little as $2 a barrel, compared with as much as $12 a barrel to move shale oil from the Bakken from North Dakota to the East Coast by rail, making a lot of financial sense for the refineries to look to west Africa for their crude supply.

More west African crude going to the US could however mean less making its way to Asian refiners. India, China and others took more of these displaced barrels in recent years as US demand dried up.

Source : energymixreport.com
Posted On: 10/15/2015 12:00:00 AM

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