U.S. crude stocks rocket as Saudi supply floods in-EIA

Reuters, 04.02.03, 10:54 AM ET

NEW YORK (Reuters) - U.S. crude oil stocks jumped by 2.5 percent last week as a rush of new supply from top world exporter Saudi Arabia pushed imports to the highest level on record, government figures showed on Wednesday.

Crude oil stocks ballooned 6.8 million barrels to 280.7 million in the week ended March 28, the Energy Information Administration said in its weekly supply report.

Stocks swelled as U.S. crude oil imports jumped to nearly 10.4 million barrels per day (bpd), the largest average on record, the EIA said.

"Crude oil imports from Saudi Arabia increased sharply, an apparent reflection of much higher production that began in February," the EIA said.

Crude oil imports have averaged 9.1 million bpd over the last four weeks, which is more than 400,000 bpd more than averaged over the sameperiod last year, the EIA said.

"The tidal wave of crude we've been waiting for has finally hit our shores," said Bill O'Grady, analyst with A.G. Edwards.

Imports have also recovered from big regional supplier Venezuela, which is recovering from a two-month workers' strike that crippled its oil industry.

"Imports from Venezuela last week seemed to average close to normal levels," the EIA said.

The increased stocks give more of a cushion against the loss of Iraq's 1.7 million bpd of crude exports since the first days of a two-week U.S-led invasion.

Nearly 40 percent of Nigeria's oil production has also been shut in due to ethnic violence there ahead of mid-April elections. Nigeria is one of the top six U.S. oil suppliers and its high-quality crude is good for making gasoline.

Oil prices were down $1.28 at $28.50 a barrel after the report, already driven down by military advances in the U.S-led war against Iraq.

Gasoline inventories rose by 1.7 million barrels to 200.7 million barrels last week, though remain below the low end of the normal range, the EIA said.

"We're hearing Venezuela exports of gasoline are finally restarting and that's something we'll be watching very closely," O'Grady said.

Venezuela's strike also cut into gasoline supplies, and refiners have been unable to step up gasoline production as much as normal as they worked to meet heating fuel demand during a cold northern winter.

Distillate fuel inventories, including heating oil, decreased by 1.6 million barrels last week, the EIA said.

Industry group the American Petroleum Institute, which issues a supply report at the same time, said that crude stocks rose by 9.0 million barrels, distillate stocks fell 3.3 million barrels and gasoline stocks rose 2.5 million barrels.