Chinese crude oil imports hit the second highest level on record last month, and U.S. oil producers are reaping the benefits.
U.S. crude oil imports into China hit an all-time high in November, according to figures from ClipperData. The tanker-tracking firm reports that 289,000 barrels a day of U.S. crude hit Chinese shores by the end of the month.
That is a small share of the 9.01 million barrels a day that China imported in November, but it shows that U.S. producers continue to make inroads into the country two years after Congress lifted a 40-year ban on crude oil exports.
Chinese imports of U.S. crude oil, source: ClipperData
The United States has been able to penetrate the market in part because OPEC, Russia and nine other oil exporters are limiting their production in order to balance an oversupplied market. That has allowed U.S. producers to capture some of China's growing crude oil demand.
But there's a bigger factor at play in recent months, according to Matt Smith, director of commodity research at ClipperData. U.S. crude is trading at a significant discount to international oil prices.
The price difference between U.S. West Texas Intermediate crude and international benchmark Brent crude expanded this fall after Hurricane Harvey shut down U.S. Gulf Coast refineries. That suppressed the price of WTI, making it attractive to overseas buyers. The Chinese purchases started around that time, according to Smith.
The price spread between WTI and Brent has narrowed since then, but still stands at about $6 a barrel. That helped to drive total U.S. crude oil exports to an all-time high above 2 million barrels a day in October.
U.S. exports to China are "really going to depend on the spread," Smith said. "We're still here at over $5 on the Brent-WTI spread and so as long as that U.S. crude is discounted it will be bought up by Asia or Europe."