U.S. Imports of Saudi Crude Rebound From Four-Year Low

U.S. crude oil imports from Saudi Arabia rebounded last week from the lowest level in more than four years, government data show.

Shipments from the desert kingdom doubled to 1.23 million barrels a day the week ended Oct. 10, according to preliminary data from the Energy Information Administration. Rising U.S. output won’t replace all Saudi imports because of qualities of Arab Light that make it prized by some refiners, said Nilofar Saidi, a crude oil market analyst at ClipperData LLC in New York.

“There will continue to be demand for Arab Light because it can’t just be replaced easily,” Saidi said by phone. “The key point is the difference between sour and sweet crude. There are unique characteristics to the sour crude from Saudi Arabia that make it ideal for lubricant production.”

Saudi Arabian oil imports have fallen from their peak as the combination of horizontal drilling and hydraulic fracturing, or fracking, unlocks supplies from shale formations in states including North Dakota and Texas. Crude production rose to 8.95 million barrels a day in the week ended Oct. 10, the most since June 1985, according to EIA estimates. Output will climb to 9.5 million barrels a day next year, the most since 1970, the EIA estimated Oct. 7.

U.S. imports of Saudi Arabian crude are down from a record annual average of 1.73 million barrels a day in 2003, EIA figures show.

Domestic Production

“Domestic production is displacing the Saudi barrels that used to arrive on the Gulf,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone yesterday. “The shale oil from North Dakota and Texas is finding its way to the Gulf where it’s needed.”

The kingdom was the second-biggest source of imports last week behind Canada, whose shipments to the U.S. topped 3 million barrels a day for the first time in the week ended Oct. 3. Canadian oil output is projected to increase 6.8 percent to 4.38 million barrels a day this year and climb to 4.47 million in 2015, the EIA said Oct. 7.

Saudi Arabia bolstered output by 50,000 barrels a day to 9.65 million in September, according to a Bloomberg survey of oil companies, producers and analysts. The kingdom was responsible for 31 percent of the production by the 12-member Organization of Petroleum Exporting Countries last month.

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