SNAP ANALYSIS – U.S. oil imports drop as more crude stored at sea

NEW YORK (Reuters) – A steep premium for long-dated crude oil futures has temporarily prompted traders to park more barrels off the U.S. Gulf Coast, spurring a dramatic drop in U.S. imports last week.

U.S. crude imports fell by more than 1.4 million barrels per day in the week through Aug. 14 to 8.11 million bpd, their lowest level in more than 11 months, according to data from the U.S. Department of Energy released on Wednesday.

The discount for prompt barrels of U.S. benchmark crude West Texas Intermediate against later months, a market structure called a contango, has created an incentive for refiners to draw down plump inventories while traders sought to keep oil out of physical markets in anticipation of prices rising later.

Stocks of crude stored offshore fell to 50 million to 60 million barrels in June and part of July, but several sources recently put them around 70 million barrels and rising. The barrels count as imports only after clearing Customs.

“Trading companies and sellers have been content to park their barrels in offshore storage and enjoy the contango,” a source at a U.S. refiner, who asked not to be named said.

Reuters