(John Kemp is a Reuters market analyst. The views expressed are his own)
* Chartbook: tmsnrt.rs/39NsczO
By John Kemp
LONDON, July 30 (Reuters) - Bloated U.S. crude inventories are finally on a diet, after the surge of imports from Saudi Arabia, loaded at the height of the volume war with Russia in March and April, finished discharging in the middle of July.
Total crude stocks fell almost 11 million barrels last week, the largest one-week decline since 2019, the latest data from the U.S. Energy Information Administration (EIA) shows.
Crude stocks in commercial storage and the strategic petroleum reserve have fallen by 13 million barrels since the start of July, after increasing by 106 million since mid-March.
Inventories swelled from 60 million barrels below the prior five-year average at the end of February to 65 million barrels above it by the middle of this month (tmsnrt.rs/39NsczO).
Much of the increase is attributable to a surge in imports from Saudi Arabia, originally loaded during the volume war, then discharged over eight weeks between May 16 and July 10.
Crude imports from Saudi Arabia soared to as much as 11 million barrels per week, from an average of less than 3 million barrels a week over the previous year.
Over the entire eight-week period, imports from Saudi Arabia were around 50 million barrels higher than the average for similar periods over the prior year.
But in the last two weeks, imports have dropped back to the long-term trend, or below, as the volume-war tankers completed discharging.
Last week, crude imports from all sources fell to just 5.1 million barrels per day (bpd), the second slowest rate for 28 years.
The slowest was the week ending April 17 - when imports were 4.9 million bpd.
Provided shipments remain slow, there is no new surge from Saudi Arabia, and a new wave of the novel coronavirus does not cause the economy to stall again, U.S. refiners will gradually absorb excess crude inventories.
But the long list of conditions makes clear just how fragile the rebalancing process is likely to be, vulnerable both to any premature increase in oil production or a renewed slowdown in the economy.
- U.S. crude stocks bloated by aftermath of volume war (Reuters, June 11) - U.S. crude stocks swell as tankers from Saudi Arabia unload (Reuters, May 29)
- Saudi Arabia should call a truce in oil price war (Reuters, March 19)
- Saudi Arabia tries shock tactics to bring oil war to swift end (Reuters, March 10) (Editing by Barbara Lewis)