April 20, 2022

Bringing the highest level of transparency to U.S. crude oil export flows

As the United States is establishing itself as one of the world’s top crude oil exporters and getting its oil a wide range of destinations, it is increasingly important to have accurate and timely information on American crude export flows, especially at a time when a tightly supplied market riddled with geopolitical uncertainty. As a technology-driven company, Kpler makes the most use of AIS information, comprehensive and regularly updated mapping of all crude oil terminals as well as smart tracking algorithms, making ourselves in the position to ensure the highest level of data accuracy of US oil flows, provide even more immediate and reliable data than EIA and ride the waves of the ever-changing global crude oil market.

The United States has come a long way in establishing itself as one of the world’s top exporters of crude oil, thanks to the shale revolution that helped the country progress closer to energy independence. Six years after lifting the crude oil export ban, the United States has emerged as a major seller of crude, averaging about 3 million barrels per day in 2021. American oil has found its way to a wide range of destinations around the world, and has since become an integral part of many refineries’ crude slates. With an ever-increasing significance to the global oil market, WTI Midland light sweet crude, America’s predominant export grade, is proposed to be included in Platts’ Dated Brent assessment, the most widely used physical crude pricing benchmark worldwide. As U.S. crude oil production is expected to reach record levels next year amid a tightly supplied market riddled with geopolitical uncertainty, getting accurate and timely information on American crude export flows is all the more important.

Consistent with Kpler’s mission to facilitate efficient and sustainable trading, bringing the highest level of transparency to the dynamic U.S. crude oil market is among the top priorities of our market data analyst team. We combine all relevant information from the most granular scale, dissected by our seasoned global team of analysts, to show the complete picture of the U.S. export market. This data can then be used to readily analyze American oil flows from the broadest level such as destination countries, origin terminals and market players, to specific details such as the particular ship-to-ship transfers involved in the trade, total volumes in floating storage, or even the relationship of exported volumes to shipping rates.

Our tracking of American crude oil exports begins weeks or months before a cargo is even scheduled to load. We combine vessel fixture data from a multitude of vetted sources to have a forward-looking view of the ships chartered to arrive and load oil at American ports, along with the market players involved in the trade. Once any given ship is on its way to the U.S., the captain will signal via AIS their estimated time of arrival at port and their current specific geographic position. AIS information is among the backbones of our data, as it provides ground truth detail on the exact timing of when exports and imports happen, and all the stops and transfers that might transpire during the process.

Once a vessel arrives at port, our algorithm gets alerted to create a port call, which eventually gets attributed to a specific oil export terminal once AIS position data shows it docked. Kpler has a comprehensive and regularly updated mapping of all crude oil terminals and their respective berths, allowing us to monitor every single vessel loading and discharging crude in the United States in real time.

Vessels are initially assigned an estimated volume loaded based on the draft change indicated by AIS data after undocking, along with smart constraints within our tracking algorithm that allocate a market-representative volume based on historical averages for the specific export terminal. Shortly after, we’ll refine this data to reflect the exact barrel volume and grade loaded using bills of lading reported to U.S. Customs. The cargoes aboard the vessels are then tracked all the way to their eventual destination terminals.

Following our acquisition of ClipperData last year, we now have integrated within Kpler’s data the complete history of U.S. crude oil exports using verified bills of lading information, predating the lifting of the crude export ban. The aggregation of these oil trades happening in real time, grounded on hard data from a variety of sources, allows us to show what’s happening in the U.S. crude export market at any given time. This tried and tested approach is the basis of our exports data, aligning well with the Petroleum Status Monthly report from the U.S. Energy Information Administration.

While the EIA also publishes a weekly estimate of U.S. crude exports, the government agency’s weekly paperwork-tracking methodology may sometimes misrepresent the true export market that week. The weakness of this approach is the reliance on when export documents are submitted at the individual port agencies before being sent to a centralized database for processing, instead of the true timing of when vessels loaded and sailed. Typically, the more accurate EIA monthly report, released two months after the reported month elapses, corrects for the inconsistencies of the weekly reports. When such data inconsistencies occur, market participants look to Kpler for reliable vetted data that reflects the true U.S. export market as it happens in real time.

The graph below shows the crude oil export estimates from the EIA Weekly Petroleum Status report normalized on a monthly basis, the exports estimate from the EIA Petroleum Supply Monthly report and Kpler’s monthly seaborne figures adjusted with a 200 kbd land-based flow assumption.

Instances of when the government’s paperwork-based tracking methodology misrepresented true market events include times when heavy fog and inclement weather caused port closures along the Gulf Coast. Such was the case when EIA weekly estimates showed much higher exports in Q1 2019 than what could have physically transpired, as some of the export paperwork could have been filed before a vessel is cleared to depart American ports.

Conversely, records that don’t make the EIA cutoff on time for a given week have historically caused significant underestimation of actual exports. More egregious cases started to reflect on the EIA’s weekly data in 2020 when the COVID pandemic likely caused delays in the data pipeline of the government agency, with export paperwork received considerably after the actual export times.

In the most recently released monthly petroleum status report for January 2022, the EIA estimated U.S. crude oil exports at 3,347 thousand barrels per day (kbd). The agency’s normalized weekly figure for the same month was 2,499 kbd, an underestimation of about 850,000 barrels per day. To put this in perspective, the 25% error from the weekly estimate is the equivalent of missing a Suezmax-type oil tanker per day, nearly enough to meet the entire crude import demand of France. As a comparison, Kpler’s data based on the true timing of exports is at 3,368 kbd, aligning well with the EIA monthly petroleum status report figure.

After such egregious misses, the EIA revised their weekly export methodology last month to include export volumes missed in the prior week. “We updated our edit rules for the current week to include additional records from the prior week’s reporting period that were received too late to be included in prior week’s estimates. We include any of these records that pass edit rules in the current week’s estimate,” according to the government’s latest methodology release.

While this recent export methodology change makes the running average of the weekly petroleum status report figures adhere closer to ground-truth data, accounting for some export volumes in a different week from their actual time frame misrepresents the market timeline. It can also cause considerable inconsistencies to the supply/demand balance of the Weekly Petroleum Status report. This may exacerbate the reporting of unaccounted-for oil in the government’s weekly supply/demand balance, labelled as ‘crude supply adjustment factor’ in the EIA weekly publication.

This also highlights the strength of Kpler’s technology-driven tracking data, which shows commodity flows information as they happen in real time. It gives significantly more context and transparency than a figure released every week or month. In addition to giving users the ability to track the present-time export data, we show how exactly we came up with the numbers by displaying every single cargo and vessel that comprise the volume.

In this current tight market landscape, it is all the more important to ensure the highest level of data accuracy when making business decisions. It is for this reason that Kpler has continued to keep the trust of market participants as we continue doing what we do best - facilitating efficient and sustainable trade with unparalleled transparency and reliability. Fueled by innovative technology and unrelenting determination to deliver the best data to the customers, we are well-equipped to ride the waves of the ever-changing global crude oil market.

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