(John Kemp is a Reuters market analyst. The views expressed are his own)
* Chart 1: tmsnrt.rs/2vI1iE2
* Chart 2: tmsnrt.rs/2ugxa3b
LONDON, July 21 (Reuters) - Saudi Arabia is making good on promises to curtail oil shipments to the United States with the likely intention to drain visible inventories and support prices.
The United States imported an average of 524,000 barrels per day (bpd) of crude from Saudi Arabia in the week ending July 14, the lowest volume for more than seven years (tmsnrt.rs/2vI1iE2).
Imports from Saudi Arabia averaged just 810,000 bpd over the last four weeks, according to the U.S. Energy Information Administration (EIA), the slowest rate since January 2015.
Crude arrives on supertankers carrying an average of around 2 million barrels so the weekly import numbers exhibit a lot of volatility linked to the timing of tanker arrivals.
Imports are only reported to the U.S. Energy Information Administration when the crude has cleared U.S. customs so weekly volumes are sensitive to the precise timing of customs clearance.
But there is no mistaking the downtrend in imports of Saudi Arabian crude since the start of June which seems set to continue until at least the end of August.
On July 20, there were 15 very large crude carriers and 3 Suezmax tankers identified en route from Saudi Arabia to the United States, according to Kpler, a global cargo-tracking firm based in Paris.
The number included some partially loaded tankers already off the U.S. coast waiting to complete discharging, according to an analysis by Kpler. There are also a couple of Saudi cargoes with unclear final destinations.
But at the same point in 2016, there were 25 very large or ultra large crude carriers and 3 Suezmax tankers voyaging from Saudi Arabia to the United States.
Saudi officials have openly discussed reducing shipments to the United States in recent weeks.
Saudi crude exports to the United States will be below 800,000 bpd in August, a Saudi industry source familiar with production policy told Reuters (“Saudis to cut Aug oil exports to lowest level this year”, Reuters, July 12).
Crude and product stocks in the United States are the most transparent and high-profile element of global inventories thanks to the weekly records published by the EIA.
Many traders and analysts use weekly stock data from the EIA as a proxy for changes in the global supply-demand balance, even though they may not be representative of the whole market.
Saudi Arabia and its OPEC and non-OPEC allies are keen to demonstrate to a sceptical market that output cuts are finally drawing down bloated stocks.
So it makes sense to curb shipments to the United States to try to accelerate the reduction in the highly visible stocks held in North America.
Crude and fuels markets are global not regional, and oil will find a way of flowing to where it is most needed or convenient to store.
Total crude imports to the United States have fallen in recent weeks which, coupled with heavy refinery runs, has helped cut domestic crude stocks faster than normal for the time of year (tmsnrt.rs/2ugxa3b).
But there are indications reduced Saudi shipments to the United States are being partially replaced by increased shipments from Iraq as refiners seek the closest alternative medium-heavy sour grades.
And Saudi shipments have increased to India and Japan, according to vessels and cargoes tracked by Kpler, which may be offsetting some of the reduction to the United States.
“Saudi Arabia curbs oil shipments to the United States”, Reuters, July 13 (Editing by Edmund Blair)
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