SINGAPORE, July 21 (Reuters) – Asian
refiners have booked near-record volumes of U.S. crude to be
shipped in August, replacing Middle Eastern oil, as competitive
prices and ample supplies attracted heavy buying, according to
trade sources.
The jump in U.S. imports comes on the back of strong Chinese
demand for Brazilian oil in the third quarter as Asia boosts its
light oil purchases from the Americas, reducing demand for
similar quality grades from the United Arab Emirates.
About 1.5 million to 1.9 million barrels per day (bpd) of
U.S. crude, mostly West Texas Intermediate (WTI) Midland, will
be bound for Asia next month, traders said. That would be shy of
the record 2.2 million bpd loaded in April, according to
shiptracking data from Kpler.
“U.S. crude is being pushed aggressively to Asia recently,”
said a Singapore-based trade source.
The large flow of U.S. crude to Asia is aided by steep
discounts for WTI against Middle East benchmark Dubai, which
make hauling oil from the U.S. more economical for Asian buyers.
The average discount for WTI futures to Dubai swaps was at
$5.40 a barrel, as of July 20, slightly narrower than $6.08 a
barrel last month but wider than $3.93 seen in May.
The costs of chartering a very large crude carrier (VLCC) to
China from the United States touched a two-month low of $7.4
million last week, down $2.8 million from a month-ago levels,
Simpson Spence Young data on Refinitiv Eikon showed.
The costs have led WTI Midland to trade at about $3 a barrel
over Dubai quotes delivered to North Asia in October, slightly
cheaper than Abu Dhabi’s flagship Murban, which has a higher
sulphur content. Sweet or low-sulphur oil is typically more
expensive than sour crude.
Stronger interest in U.S. crude also comes as Asian
refiners, especially in China, look to replace more expensive
Saudi Arabian crude after state giant Saudi Aramco hiked its
official selling prices (OSPs) for two straight months.
“China requested less term supply from Saudi in recent
months and is seizing crude from everywhere to fill in the
supply gap,” said another Singapore-based trader.
China, the world’s largest crude importer, has increased its
procurement of U.S. crude this year apart from record purchases
of Russian and Saudi oil due to favourable prices and robust
refining demand.
China’s U.S. crude imports reached 3.05 million metric tons,
or 742,824 bpd, in June, the highest level since December 2020,
according to customs data.
“We forecast U.S. exports to Asia will increase
quarter-on-quarter in Q3 23, with China and even Japan
purchasing Midland cargoes in size,” said analysts from
consultancy Energy Aspects.
Japan sources more than 95% of its crude oil from Middle
Eastern countries and is the top buyer of Abu Dhabi light grades
such as Murban, Das and Umm Lulu. Japanese refineries, however,
have been slow to take UAE light crude so far this month, partly
because of outages at Japan’s top refiner Eneos and fellow
refiner Cosmo Oil, traders said.
(Reporting by Muyu Xu and Florence Tan; Additional reporting by
Arathy Somasekhar in Houston; Editing by Sherry Jacob-Phillips)
Read More: Asia buys near-record volumes of US crude, replaces MidEast oil – sources