Saudi Arabia’s crude oil stockpiles fell from a record amid signs that overseas demand for refined products was picking up as margins improved.
Stockpiles dropped to 322.7 million barrels in September from 326.6 million in August, the highest since at least 2002, according to data published on Wednesday on the website of the Riyadh-based Joint Organisations Data Initiative (JODI).
Gasoline exports climbed to a record and Saudi Arabia’s own refineries processed 2.5 million barrels of crude daily, an all-time high and up from 2.2 million barrels a day in August.
Refineries are earning so much money from the low cost of crude and higher selling prices for their products that they are cutting back on maintenance. Plants are usually taken off line for repairs in September and October. Saudi Arabia’s Yasref oil refinery is processing crude at full capacity as margins improved since August, chief executive officer Mohammad Alshammari said last month.
“Refineries at home or abroad seem to be back very fast from maintenance,” Mohamed Ramady, an independent analyst and former economics professor at King Fahad University of Petroleum and Minerals, said by phone from London. “The fastest way to delivery crude to them is from stockpiles.”
Brent crude oil prices dropped 23 per cent this year amid a global supply glut. Brent futures for December settlement climbed 1.7 per cent to $44.31 a barrel on Wednesday as United States industry data was said to show a drop in the nation’s crude stockpiles for last week.
Crude inventories dropped for the first time in four months in Saudi Arabia, the biggest producer in the Organisation of Petroleum Exporting Countries (Opec). Its crude exports rose to 7.1 million barrels a day from 6.99 million in August, according to the JODI data.
“Crude stockpiling can’t go up indefinitely, so at some point some draws have to be made from them to give room for new crude to be stored when needed,” Ramady said.
Saudi Arabia cut oil production in September to 10.23 million barrels a day from 10.27 million in August, according to the JODI data. The kingdom told Opec that it produced 10.28 million barrels daily in October, which would be the first increase since the record output of 10.564 million in June.
Refined products exports from Saudi Arabia fell in September, to 1.19 million barrels a day from 1.35 million, according to JODI. Gasoline bucked the trend, rising to a record 206,000 barrels a day from 200,000 barrels in August. Saudi gasoline production dropped to 529,000 barrels a day in September from 559,000 barrels a month earlier.