Record output, tax evasion push up US Gulf Coast oil exports According to Reuters

© Reuters. FILE PHOTO: A marine barge is loaded with oil from the Eagle Ford Shale at the newly expanded oil dock at the Port of Corpus Christi, Texas, April 10, 2014. REUTERS/Darren Abate/File Photo

By Georgina McCartney

HOUSTON (Reuters) – Oil is flowing out of Texas in the final weeks of 2023 as traders find outlets abroad for record U.S. output and avoid a hefty year-end tax bill on their stockpiles.

exports, almost all of which leave the Gulf Coast, have averaged about 4 million barrels per day (bpd) this year, about 500,000 more than last year’s record, according to U.S. government data, as oil output climbed to 13.2 million barrels per day. day.

The wider discount in U.S. West Texas Intermediate crude to the global benchmark, currently around $4.50 a barrel, makes U.S. crude more attractive to European and Asian refiners.

“Asia-bound flows are poised to finish the year strong, particularly for China-bound cargo,” said Matt Smith, an analyst at ship-tracking firm Kpler.

U.S. Gulf Coast crude inventories fell 1.2% to 247.9 million barrels last week, a third straight week of declines, partly due to strong exports. Storage utilization was approximately 63% of total working capacity along the coast, which is lower than the average utilization in previous years.

Another factor driving the exodus is a year-end tax on oil in Texas storage.

U.S. crude exports are likely to average around 5 million bpd in the final two weeks of the year as the tax consideration pushes barrels out of the Gulf Coast, according to Kplera’s Smith.

Those who can’t move barrels on water will look to ship oil to places where the tax is lower, such as the massive storage center in Cushing, Oklahoma.

In Oklahoma, the tax rate is around 1%, while in Texas it is around 2.50% to 2.75%, according to energy research firm Energy Aspects.

Cushing inventories rose for eight straight weeks this month to 30.8 million barrels from 21 million barrels.