Asian exports of West African crude oil falls in July
Maintenance work on refineries has led to a sharp decline in imports into India while Chinese traders and end-users have also taken substantially less crude oil after topping up their tanks in July, trade sources said.
A sharp rise in the benchmark on which West African crude oil is priced has also helped discourage purchases.
Asian buyers have taken 1.32 million barrels per day (bpd) of crude, mostly from Nigeria and Angola, in 43 cargoes in August after taking 1.93 million bpd in July and 1.65 million bpd in June, the Reuters survey shows.
“Indian buying eased off significantly in August, partly due to refinery turnarounds, although volumes were down across the board,” said a West African crude oil trader with a large U.S. oil company.
REBOUND IN SEPTEMBER
Oil prices fell sharply in May and remained fairly weak for much of June when many of the spot purchases for crude oil loading in July were concluded.
Brent crude oil futures, the benchmark used to price oil from West Africa, fell nearly $20 per barrel between May 3 and May 25, prompting Asian buyers to soak up extra barrels at lower levels.
When the price of the North Sea benchmark is weak it can make West African barrels cheaper for Asian buyers compared with local and Middle Eastern grades priced against other benchmarks.
But spot prices for Brent recovered sharply in July when deals for cargoes lifting in August were agreed.
In all, Chinese buyers have agreed to ship 28 cargoes from West Africa in August, down from 36 cargoes in July, while Indian buyers took just 10 cargoes, down from 22 in July.
Initial indications from trade sources and shippers suggest that Asian imports of West African crude will rebound sharply in September as Chinese buyers have re-entered the market in the last few weeks.
So far for September loading, Asian buyers have committed to take at least 48 full or part-cargoes from Angola and other West African oil producers such as Equatorial Guinea and Congo.
That would put average shipments of West African crude to Asia at around 1.52 million bpd but the tally is likely to rise further over the next few days, traders said.