Lower US oil imports a seasonal thing

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As a super-duperly strong dollar pressures the new WTI front month contract into negative territory to end the week, hark, here are five things to consider in oil markets today:  

1) Yesterday we discussed how the U.S. West coast has seen imports drop off considerably this month, led by weakness in deliveries of Saudi crude. We have seen a similar case of import weakness on the Gulf coast of late, but in this case it has been driven by a lack of Colombian receipts.  

Our ClipperData show Colombian imports to the U.S. Gulf have averaged 260,000 barrels per day so far this year. October’s current pace is at a much lesser 77,000 bpd, with all grades absent except for Castilla blend:

Colombian grades into US Gulf.jpg

2) Heavy sour Castilla blend crude has made its way to 15 different refineries and terminals on the U.S. Gulf coast this year (hark, home to nearly half of all U.S. refinery capacity), delivering to about half of these on average each month so far through September. However, as refinery maintenance has kicked in, Castilla blend has only made its way to three such destinations so far this month. 

Our ClipperData show imports of medium sour Vasconia crude to the U.S. Gulf have averaged 84,000 bpd so far this year through September, 7.5 percent higher than year-ago levels. Arrivals, however, have been completely absent so far this month – just as they were last year.

The weakness we are seeing in imports is very much a seasonal trend, as highlighted by the chart below. October is typically the weakest month of the year amid refinery maintenance, before we see a rebound – with refinery runs – through the end of the year:

Castilla Vasconia.jpg3) The prize for the most hilariously duplicitous headline of the day goes to “Russia eyes record-high oil output, but sticks to ‘freeze’ option“, as Russian Energy Minister Alexander Novak said it will produce 11mn bpd next year, but that it still wants global producers to curb production amid weak prices. Ooh, that tickled me.

4) Staying on the topic of Russia, yesterday we discussed how ongoing investment by Russian producers is set to propel Russian oil production to new post-Soviet records in the coming years.

The chart below shows how Rosneft has cut its debt in half, according to its reported net debt levels. That said, the reported number doesn’t include billions of dollars of pre-payments from the likes of China. If they are included, Rosneft has only reduced its debt by $6 billion since 2013, compared to the reported $22 billion. 

Rosneft debt.jpg

5) Finally, although Japan has already imported an average of 200,000 bpd of Iranian crude so far this year through September, this number is set to increase as more conservative traders restart purchases. Private shipping insurance likely returning to full coverage by the end of this year is set to encourage some trading houses back into business with the Persian state. 

In terms of Iranian flows into Asia so far this year, East Asia has been the leading recipient, with China accounting for over 40 percent of all Asian deliveries. South Asian offtake is entirely to India, accounting for a quarter of all Asian flows, while smaller volumes earlier in the year made it to Southeast Asia, with the Philippines receiving a delivery in March of 566,000 bbls of South Pars condensate, as well as three cargoes discharged in Singapore in the first half of the year.

Iranian crude exports to Asia ClipperData.jpg