The latest EIA PSM data show continued strong US demand growth through 1Q’15 and a y/y rise in net oil imports in March for the first time in 50 months(see figure 1). US oil demand growth, up 481-k b/d y/y in 1Q’15 and lower production growth have stalled the US’ march towards energy independence. US crude imports from OPEC leader Saudi Arabia bounced back above 1-m b/d in March, with the price gap between Arab Medium supplies to Asia and the US contracting sharply.
The US net oil import position has stabilized as petroleum product net exports have flat-lined since the beginning of the year, with US refinery utilization essentially maxed out and domestic demand picking up. However, US net crude imports could resume their fall later this year, with non-baseload imports being bid away from the US – something which seems to be bearing out in weekly data. Another issue is that Canadian crude imports are included in the US net oil import number, and they rose 541-k b/d y/y in March, skewing the headline net oil import figure. Taking out Canada, net oil imports fell 446-k b/d y/y to 2.4-m b/d. Net oil imports from Canada topped 3-m b/d for the first time ever (see fig 3).
It’s really not much fun being the marginal cost producer, as iron ore juniors already know and Australian LNG will soon find out.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
