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Oil Prices Inch Higher As Saudi Crude Oil Loadings Drop

We discussed back in early May how Saudi Arabian crude export loadings in April had dropped materially. Given the journey time to US shores (hark, seven-ish weeks), the expectation was that we would start to see lower volumes reflected in the June data. And sure enough, as we prepare to exit June stage right, arrivals are on the decline.

Imports of Saudi barrels into the U.S. so far this month have dropped below one million barrels per day for the first time since last November. Although U.S. imports of Saudi crude are still averaging higher than year-ago levels so far this year (to yesterday), this is in part due to strong arrivals in the first few months of the year (and particularly January, at nearly 1.4 million barrels per day - wowzers) - offsetting recent weakness.

While March-May arrivals have stayed neck-and-neck with year-ago levels, June volumes are finally coming off. Imports into the U.S. are below 900,000 bpd with less than a week of the month left:

(Click to enlarge)

It is a similar story for Saudi flows into Asia. We have to go back to November 2014 to see Asian offtake dropping below the 4 million barrel-per-day mark. Just as we saw U.S. imports spiking in January as Saudi ramped up export loadings at the end of last year, we see exactly the same trend in Asian volumes. Imports popped over 5mn bpd in January, and fizzed around ~4.5 million bpd in recent months...before a June swoon:

(Click to enlarge)

To counter the supportive influence of the above data, we are seeing Saudi exports rebounding thus far in June. Not only that, but export loadings have also picked up this month from a number of different countries (think: UAE, Iraq, Angola), while higher Libyan and Nigerian production is reflected through in higher exports.

Nearly six months through the OPEC / NOPEC production cut, and it is very much still a case of whack-a-mole for the various players: one month they duck lower, only to poke their head higher the next month. All this leaves OPEC exports at basically the same level as back in October.


(Click to enlarge)

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By Matt Smith

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