U.S. Gasoline Exports Continue to Grow in 2019
According to ESAI Energy’s recently released One-Year Global Fuels Outlook, the U.S. gasoline surplus will expand by roughly 80,000 b/d next year as demand continues to plateau and output keeps rising. Since first moving into surplus in 2016 the U.S. gasoline balance has risen steadily to roughly 350,000 b/d this year. As a result of a growing surplus, combined U.S. exports of finished gasoline and motor gasoline blending components will rise to over 1.0 million b/d next year.
However, at the same time, the gasoline deficit in Latin America, which receives most U.S. exports, will narrow slightly as regional gasoline output recovers. With total U.S. gasoline exports expected to rise and the deficit in the U.S.’ primary export market shrinking, exporters will look not only to capture greater market share in Latin America by replacing volumes from other exporters in Europe and Asia, but also look to increase exports to other markets.
But, as ESAI Energy analyst Ian Page states, “excess U.S. gasoline volumes will face stiff competition in an oversupplied global market.” Next year, the Asia-Pacific and FSU gasoline surpluses will both increase. Meanwhile the Middle East’s deficit will shrink dramatically from over 300,000 b/d to less than 150,000 b/d due to major supply growth in Saudi Arabia, Iran, and the UAE, where significant refining capacity is coming online. These developments in combination with rising U.S. exports will exert bearish pressure on global gasoline markets and gasoline spreads to crude will weaken even further in 2019.
Source: ESAI Energy