Weak Trade Deficit Brings Opportunity for Oil and Gas Exporters

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If you are a shale driller and into fracking, there is a huge opportunity for oil and gas exports after looking at the latest trade data. The latest report on international trade, the trade deficit, came in at -$39.1 billion for the month of July. Bloomberg had a consensus of -$39 billion. Since this report was mostly in-line with expectations, we are not evaluating it for a market moving event. This is opportunity knocking for energy exporters top to bottom.

The July trade deficit did worsen from $34.4 billion in June, which was preliminary reported as $34.2 billion. What took place was that exports were down by 0.6%, but that was on the heels of a 2.2% gain in June. Imports rose by 1.6% in July, way up from the 2.2% drop in the June report.

After looking through the reports on this, Bloomberg pointed out that this worse trade deficit was primarily due to the nonpetroleum goods deficit, and that grew to $38.7 billion in July from $35.0 billion in June. We looked through the data and the petroleum deficit increased to $18.7 billion in July, versus $17.5 billion in June.

The services surplus also fell only marginally to $19.4 billion from $19.5 billion. We would point out that the international trade balance has remained relatively low because of sluggish import demand. Slow global growth, particularly from Europe and top emerging markets running way under capacity, are acting to curb demand for U.S. exports at a time when the currency remains somewhat elevated.

So why is this a huge opportunity? The United States is in the position to continue its energy boom for another decade or longer. Earlier this year, the Eagle Ford Shale was called an $89 billion annual impact ahead, and that is just one of the booming shale regions. The EIA even has gone on record to forecast that 2 million jobs could be created from this boom.