U.S. May crude imports from "Riyadh Pact" three up
NEW YORK, June 11 (Reuters) - U.S. imports of crude oil from its three largest sources -- Saudi Arabia, Venezuela and Mexico -- rose 4.5 percent in May from the previous month to 4.266 million barrels per day, the largest monthly total this year, according to provisional estimates from the Department of Energy.
Overall crude imports to the United States showed an even stronger rise, up 534,000 bpd, or 6.7 percent, on the month at 8.584 million bpd.
Imports from the big three, which compete fiercely to be the biggest provider of imported crude to the U.S., were running at a combined average of just above 4.0 million bpd for the first five months of the year, up about three percent from the same period a year earlier.
The countries, known as the ''Riyadh Pact'' three since they spearheaded an agreement in March to cut 1.5 million bpd of crude output from OPEC and non-OPEC producers, increased their exports to the United States by 9.5 percent in the past two months since the agreement came into effect.
In March, the three agreed to cut their own production by a total of 1.245 million bpd starting April 1. With oil prices only winning a quick reprieve and then turning lower, the three met in Amsterdam last week to agree to cut a further combined 450,000 bpd from their output starting July 1.
The DoE figures for May show that imports from Saudi Arabia shot up to 1.519 million bpd from 1.305 million bpd in April; were down from Mexico at 1.391 million bpd from 1.444 million bpd; and were up slightly from Venezuela at 1.356 million bpd from 1.334 million bpd.
Analysts have been skeptical of the pledges to cut production. Though monitoring actual production is extremely difficult, analysts note that worldwide inventories have continued to rise relentlessly over the past two months. Crude inventories in the United States alone rose from below 330 million barrels at the end of March to above 350 million barrels by mid-May before turning lower in the last two weeks. The producers have said it will take until June to see the effect of cuts.
Though the rise in the U.S. total share of ''Riyadh Pact'' crude imports does not mean they have not kept to their pledges to cut production, it underlines the reason for the glut in the U.S. and the depressing effect on oil prices here.
Even if cuts have come from elsewhere, analysts argue that oil producers appear to have miscalculated demand, particularly the Asia financial crisis, and thus underestimated the amount they need to cut to keep inventories from rising in the biggest Western markets where world prices are set.
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From the Captain's Log:
It appears that the Asian Crisis is just the first to hit, ahead of the pending economic crisis that each oil producing country faces. This upcoming meeting could make or break the economic condition of oil producing countries. If they fail, it will be time to Bail !!
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