Falling global crude exports and inventories point to tightening supplies in January
Global crude supply is showing signs of tightness as total exports in January fell m-o-m by the largest amount since August 2023, while global onshore inventories continued to fall.
Total crude/condensate exports (excluding Iran and Venezuela) fell m-o-m by more than 700kbd in January, marking a steep decline after a brief uptick in December, driven partly by very high US exports. Exports would have fallen further still in January were it not for key producers Saudi Arabia and UAE posting m-o-m increases.
Key observations among top exporters:
- Saudi exports in January posted a first m-o-m rise (+350kbd) since October 2023, with most of the rise coming from higher Yanbu. Loadings from this Saudi Red Sea port allow tankers to avoid Bab el Mandeb and head to Western buyers via the Suez, or via SUMED pipeline by reload from Egypt’s Sidi Kerir.
- UAE’s higher exports in January (+280kbd) coincide with planned maintenance at Ruwais refinery.
- A sharp 420kbd drop exports from the US (including Canadian grades via PADD 3) was a function of extreme cold weather forcing production shut-ins during the month.
- Russian origin exports dropped 170kbd m-o-m, putting monthly totals at the lowest level since August 2023, but total loadings from Russian ports was supported by higher Kazakh origin exports (CPC Blend and KEBCO)
- Other major non-OPEC+ producers Norway, Brazil and Mexico, also posted monthly declines in the range of 150-300kbd
Meanwhile the latest trends in global crude oil inventories shows significant drawing is still taking place. This suggest that wider macroeconomic concerns, and its impact on demand, is being outstripped by tighter prompt availability.
Global floating roof tank utilisation for storing crude started this year will below multi-year seasonal norms and has continued to decline through January. At latest reading, tank utilisation sits at less than 52% (end of January), a 6pp decline from the 8-year average.
One of the main contributions to this drop is a continued draw in China’s inventories. Weaker imports from the Atlantic Basin, along with high price sensitivity to Russian and Iranian crude has pushed Chinese refiners to draw upon (still) relatively high inventory levels, rather than raise imports. In fact at the current draw rate, China’s teapot refiners could continue destocking for the next 6 months and still be at the same levels of inventory as start-2023.
Looking ahead, given market expectations that OPEC+ production will remain constrained, the near-term outlook for crude prices could be more supportive than current sentiment suggests, even with strong signs of weakening global product demand.
