Drop in oil imports likely a blip

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As yesterday’s exceedingly mixed weekly EIA report is digested, oil prices are unwinding a good deal of yesterday’s knee-jerk rally. As dollar strength further encourages crude lower, hark, here are five things to consider in oil markets today:

1) Yesterday’s EIA inventory report yielded a large counter-seasonal draw to crude stocks, even though refinery maintenance is likely at its peak. Imports not only dropped off from Canada, but also to all three coastal PADDs (1,3 & 5). West coast crude oil inputs reached their lowest level since April 2012 (hark, below), depressing the need for crude imports.

PADD5_crude_oil_inputs.jpg

2) With lower refinery utilization, less crude is being needed by refineries. Yesterday’s EIA report showed PADD5 imports of 751,000 bpd last week. This is the lowest level since April 2013. 

Our ClipperData show the leading suppliers to the West Coast this year. While Ecuador is the second-largest supplier, sending medium sour Oriente and heavy sour Napo grades, Saudi Arabia is leading the way in terms of volume.

But as our ClipperData illustrate, imports from Saudi Arabia have dropped right off this month, with just one delivery: 1,065,000 bbls of Arab Extra Light to Chevron’s El Segundo refinery. Monthly deliveries of Arab Light and Arab Medium have made their way to the West coast for fifteen consecutive months, but here we are, two-thirds of the way through October, and neither grade has been discharged yet.  

PADD5_waterborne_imports_ClipperData.jpg

3) While concerns swirl about Chinese output, the latest data from the National Bureau of Statistics show that producers have managed to stop the rot in September. As the chart below illustrates, Chinese production volumes managed to stabilize last month at 3.9mn bpd, ticking slightly higher than August’s level. That said, output is still 9.8 percent lower on year-ago levels, down