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U.S. Oil Production & Refining Mismatch

Sometimes a picture does tell a thousand words

Monthly EIA data was used to back into the implied difference between U.S. oil production and the U.S. oil API slate needed by refiners. Implied export barrel API was also determined. Needless to say the the U.S. is largely importing heavy oil and exporting super light oil to blend down its domestic input to meet the U.S. refining configuration.

The chart above shows monthly data. But on a trailing 12-month basis:

  • The U.S. refining slate API is 33.2°  

  • The API of U.S. oil production is 40.2° 

  • U.S. oil imports were at 26.3°

  • Using refining runs net of imports as a call on U.S. supply, the implied API of those barrels needed to blend down to the refining slate was 37.5°

  • Implied export API degrees are volatile month-to-month but are at 50.6°

Only 2-4° in API difference has massive implications for the idea of U.S. energy independence. Unless the U.S. refining slate gets lighter (it has been in recent years) the U.S. will need to continue exporting super light barrels and importing heavy barrels (mostly from our Canadian neighbors to the north) to match the U.S. refining configuration.

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