U.S. Crude Imports Seen Surging After Storm-Related Slowdown

(Bloomberg) -- A historic decline in U.S. crude imports will probably be followed by a surge in arrivals. 

Crude imports dropped 21 percent to 7.07 million barrels a day in the week ended Sept. 2, according to an Energy Information Administration report. It was the biggest drop since September 2012. Tropical Storm Hermine moved into the Gulf of Mexico on Aug. 28, disrupting shipping and output before strengthening to a hurricane and moving northeast.

U.S. Crude Imports Seen Surging After Storm-Related Slowdown

The drop in imports sent crude inventories tumbling. Stockpiles fell 14.5 million barrels last week, the biggest drop since January 1999, the report showed. Nonetheless, supplies remain at their highest seasonal level in more than 20 years.

"We might not get a complete reversal in next week’s report, but we’re sure to see a lot of it come back," said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $5.2 billion.

A 2.25 million barrel drop in imports during the week ended Sept. 21, 2012 was followed by four weeks of increases. The fall in imports after Hurricane Rita in September 2005 was followed by five weeks of gains.

"There should be a significant rebound next week," said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy.

Imports flowed in at a rate of 8.92 million barrels a day in the week ended Aug. 26, EIA data show. Arrivals have averaged 7.93 million barrels a day this year.

"The import data series has been very volatile this year as traders take advantage of arbitrages as they open, and we now can export," Kilduff said.

The U.S. lifted a 40-year ban on crude exports in December after surging U.S. shale production bolstered inventories.