Industry Trend Analysis - Greater Crude Volumes Heading To Asia - MAY 2017


BMI View: The rise in Saudi imports is contributing to US storage builds, putting downward pressure on WTI and widening the WTI-Dubai spread. This provid es greater export opportunities for US crude to Asia.

Following another large weekly build in US crude inventories, the patience of market bulls finally gave way, leading to sharp drop in the price of WTI as it broke out of its narrow wedge formation. The front month WTI futures contract is now changing hands below USD50/bbl- the first time since the end of November 2016.

One of the main culprits of the build is a large rise in imports from Saudi Arabia which hit a six month high at the start of March, rising to 1.5mn barrels per day (b/d). The rise in Saudi imports to the US runs contrary to its overall production which is down around 800,000 b/d from their October levels. One of the reasons that OPEC is engaging in an output cut is to draw down bloated stock levels, especially in the Atlantic Basin, with the rising volumes heading from Saudi to the US running contrary to this aim.

WTI Testing Key Support Level
WTI Front Month Contract. USD/bbl
Source: Bloomberg, BMI

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