Saudi Arabia’s domestic crude oil inventories jumped to a record above 300mn barrels in May this year, a rise that reflects the operational demands of the new Yasref refinery in Yanbu rather than a sign of a global supply glut, according to official reports
In May 2015, the Yasref refinery reached a record-high 2.4mn bpd, up about 20 per cent from a year ago.
The 9.3mn-barrel increase in stockpiles, the biggest one-month build in more than three years, partly explains an earlier reported drop in exports, which fell to their lowest in five months, according to official data supplied by Riyadh to the Joint Organisation Data Initiative (JODI).
Analysts said that the Kingdom of Saudi Arabia build-up most likely reflected the changing domestic oil market, not a global imbalance.
Energy Aspects chief oil analyst Amrita Sen said, “Some of this is operational.”
The country needs a larger ‘buffer’ to ensure smooth operations at the 400,000 bpd Yasref refinery joint venture, which was ramping up earlier this year and reached full capacity at the end of June, she noted.
“Logically, with internal demand up over 300,000 bpd, and exports down but no shortage of customers, higher inventories would then likely be voluntary and Yasref is the most likely candidate,” Paul Horsnell, global head of commodities research at Standard Chartered, added.
Crude oil stockpiles have risen by nearly 25mn barrels, or about nine per cent, over the past one year, the JODI data revealed.
However, crude shipments from the world’s biggest exporter fell by 800,000 bpd to just under seven million bpd, despite record-high wellhead production, a drop mainly pinned on the summertime rise in oil-fired power plants to meet peak electricity demand as well as higher demand from refineries.
