Saudi crude oil stocks likely to draw down: Barclays

Dubai (Platts)--22Jun2015/738 am EDT/1138 GMT

Saudi Arabia's domestic crude consumption is expected to pick up strongly going into the summer season, but with the kingdom intent on meeting global oil demand by keeping production high, it is likely to draw on its stocks at home and abroad, analysts at Barclays Capital said in a research note Monday.

"To meet the incremental call at a time when the kingdom's domestic requirements are set to increase as well, raises the possibility of a draw down on the kingdom's crude and product stocks, in our view", Barclays said.

Saudi crude production has averaged 9.9 million b/d for the year up to April, up 3% year on year, Barclays said, citing the latest data released Thursday by the Riyadh-based Joint Organizations Data Initiative (JODI).

Saudi wellhead production was stable at 10.308 million b/d in April, while exports dropped by 2% to 7.737 million b/d compared with March.

Domestic use of crude, however, rose by 322,000 b/d to 2.582 million b/d from 2.260 million b/d.

The volume of crude burned directly in power plants also rose to 358,000 b/d from 351,000 b/d in March.

The highest volume of crude used in power generation was 911,000 b/d in August 2010.

"Along with meeting incremental global oil demand growth, the boost in production, is partly to do with higher refinery runs in the kingdom, and buoyant local consumption of refined products," Barclays said.

The average refinery intake from January to April has risen by 10% to 2.224 million b/d.

According to Barclays, Saudi Arabia met the higher demand for its crude, by increasing production by 269,000 b/d over the period, as well as drawing on its stocks.

"The kingdom has also built crude stocks abroad and can rely on them during the summer months", Barclays said.

The stocks include inventories built up in Asia, such as a 39% rise in Japan's crude oil stocks to 6.98 million barrels at the end of April.

These are held under a joint agreement between Saudi Arabia and Abu Dhabi.

--Adal Mirza, adal.mirza@platts.com
--Edited by Jonathan Dart, jonathan.dart@platts.com

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