Betting on a Chinese stock rebound? Crude tankers might be better (Part 10 of 13)
U.S. oil production
As most investors know, the United States has been a large importer of crude oil. It still is, even though it may not be the biggest “net importer” anymore, having been replaced by China. Rising domestic production means fewer oil imports. While lower U.S. imports certainly weighed on Teekay Tankers Ltd. (TNK), Nordic American Tanker Ltd. (NAT), Frontline Ltd. (FRO, Tsakos Energy Navigation Ltd. (TNP), and the Guggenheim Shipping ETF (MOO), the rate at which domestic producers have been increasing their output is astonishing.
New record in 2014–2015
While the United States only produced 5,500 thousand barrels of crude oil a day prior to 2011, that quickly grew to 8.000 barrels a day by the end of 2013. The EIA (Energy Information Administration) recently lowered the country’s output for 2014 and 2015 on weather interruptions. But production is still expected to reach 8,420 thousands in 2014 and 9,190 thousands barrels in 2015.
Rushing to get projects on track
Crude oil rig counts, which track the number of active drills, also hit a new high of 1,473. And this is on top of efficiency gains that Market Realist’s energy analyst Ingrid Pan pointed out. The recent acceleration could show that oil companies are rushing to get project plans back on track.
Shifting future trade?
If the United States were allowed to export crude oil—which, under current law, it can’t due to resource security—crude tankers might greatly benefit from the revision. That’s because shipments from the United States to countries such as China, India, and Southeast Asia, where growth is primarily happening, takes much longer than from Saudi Arabia.
Imports may not fall
While there isn’t a sign that politicians will revise these laws at the moment, and the EIA even expects the United States’ net oil imports to fall over the next few years, crude imports may not fall at all over the next few years. Read on to the next part of this series to see the latest developments for oil imports.
Browse this series on Market Realist:
- Part 1 - Betting on a Chinese stock rebound? Crude tankers might be better
- Part 2 - Why China’s initial March PMI could be bad for oil tankers
- Part 3 - China’s relatively stable post-2013 loan growth helps oil tankers
- Sectors & Industries
- crude oil
- United States
- Frontline Ltd.