Eric Watkins
OGJ Oil Diplomacy Editor
LOS ANGELES, Feb. 27 -- Seaborne oil exports of the Organization of Petroleum Exporting Countries, excluding Angola and Ecuador, will fall to a 5-year low by mid-March, according to London-based analyst Oil Movements.
In its latest weekly estimate, OM said OPEC sailings will continue to fall at a steady rate up to Mar. 14, and that estimated sailings will have fallen for seventeen weeks in a row (up to the furthest out date).
However, the analyst said that "the reduction in sailings will (implicitly) still fall some way short" of the 4.2 million b/d in cuts that OPEC has decided upon in a bid to increase prices.
It said OPEC exports will average 22.76 million b/d, down 400,000 b/d from 23.16 million b/d in the 4-week period to Feb. 14. OM added that OPEC has delivered on about 65-75% of the agreed cuts of 4.2 million b/d.
OM said crude futures got a lift this week from what were interpreted as mildly bullish data from the US Energy Information Administration, among other things showing crude imports at a post-2004 low (excluding crisis weeks).
But, it said: "There is still a wide gap between news and rumor on the size of production cuts and the evidence available from the receiving end of the supply pipeline."
The decline in US crude imports in the latest week was big; but the fall measured in terms of smoothed four week averages was neither unusually sharp, nor out of line with the normal seasonal trend at this point.
Imports generally continue to fall as the maintenance season closes out, then pick up again as available refinery capacity goes up through end quarter.
"Our estimate of long haul barrels arriving in North American markets (mainly, of course, the US market) is suggesting that the decline visible through the year to date will close out this month," OM said.
It added that "arrivals will stay on the level…until end quarter—when provisional estimates indicate a recovery."
Long haul arrivals have sunk to 3-year lows through most of the year to date, as have US crude imports.
"Over the next 3 months the normal seasonal direction for this series is northerly, and just holding on at current low levels would be a sizeable departure from the normal pattern," OM said.
Westbound sailings from the Middle East are 750,000 b/d down on year ago at the furthest out date, and that difference will show up in arriving barrels heading into the second quarter.
But by implication, OM said, "Hard volumetric evidence available from import and stock figures may not fully reflect supply changes that will still be working through the system by the time OPEC meets next month."
US crude stocks are still climbing, and modest decline in westbound oil in transit is not now subtracting much from the combined onshore and offshore stock total, currently at a 3-year high (disregarding the current total of oil in tanker storage).
"Falling imports may make some contribution to reduction of the US crude stock overhang in the near term, but indications are that it will not be a major one," OM said.
Contact Eric Watkins at [email protected].
