As OPEC tries to keep oil off the world market, U.S. oil producers are pouring more onto it.
The U.S. last week sent more than 1 million barrels a day of crude out of the country, the third biggest export week ever, and double the average amount exported in 2016. It is also the third time this year that U.S. exports exceeded a million barrels a day, an industry record.
"It should be somewhat supportive of [U.S. oil prices] in the short run, particularly if the exports keep up. But it obviously is a challenge for the global market and a renewed threat to OPEC and their designs of keeping prices up," said John Kilduff of Again Capital
While the U.S. exported oil, it also exported fuel last week — a steadily growing business. The U.S. sold 1.1 million barrels of diesel fuel, in line with the recent average, but 608,000 barrels a day of gasoline, up from less than 400,000 barrels a day a year ago.
Analyst say the jump in exports means U.S. producers are grabbing more share at the expense of OPEC and its partners, at a time when the cartel and other producers are considering whether to extend their deal to hold 1.8 million barrels of oil off the market.
But the U.S. may also be seeing the early signs of a potential rebalancing of its own supply picture, and that could ultimately help clear a logjam of domestic oil barrels.
"What we're now seeing in the U.S. is refinery utilization increasing, as the maintenance season draws to a close. At the same time, there's good demand for gasoline and diesel which is helping get inventories under control. Those product inventories are less than they were this time last year," said Andrew Lipow, president of Lipow Oil Associates.
U.S. refineries supplied 9.5 million barrels a day of gasoline last week, up from 9.2 million the week earlier. Refinery runs increased by 425,000 barrels a day.
The government's weekly data also showed a drop in U.S. gasoline supplies of 3.7 million barrels, nearly 2 million more than expected, and a decline in U.S. diesel inventories fell by 2.5 million barrels, double the forecast. Crude oil inventories rose 867,000 barrels last week, half of what was expected, and at the Cushing, Oklahoma, storage hub, crude stocks fell by 220,000 barrels.
Oil prices, as a result jumped, with West Texas Intermediate futures rising 2.4 percent to $49.51 per barrel. Prices were also boosted by disruption in Libyan supply.
Record high U.S. oil supplies led to a glut of U.S. refined products, which had been a negative factor for crude prices this winter. The oversupply coincided with the refining industry's "shoulder season," the time of year when refineries shut down for maintenance and to switch over to summer-grade fuels.