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LAUNCESTON – Asia’s crude oil imports are expected to decline for a second month in September, as the world’s top importing region continues to lag behind recovering demand in other parts of the world.
Asia’s maritime imports are expected to decline to 31.71 million barrels per day (bpd) in September from 32.34 million bpd in August, according to data compiled by commodity consultants Kpler.
If September’s end result is in line with Kpler’s current estimate, it will be the second weakest month for Asia’s crude oil imports so far this year on a barrels-per-day basis, beating only July’s 30.91 million bpd.
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September is generally a mild month for imports to Asia as the month falls between the summer and winter peaks, but September’s imports are also down from the same month’s 32.12 million bpd in 2020. and the 32.33 million bpd of September 2019.
Asia’s lackluster imports contrast with the strong rally in crude oil futures, with the global benchmark Brent contract standing at $ 79.53 per barrel on Monday, the highest since October 2018.
The rough paper market is pulled up by media reports of an energy crisis in Europe, highlighted by gas station shortages in Britain and ongoing production disruptions in the Gulf of Mexico in the United States after Hurricane Ida.
The situation in Asia is quite different, with physical traders reporting that there is no shortage of available cargoes and refiners reluctant to purchase more crude, as demand for refined fuels in many countries remains subdued in the past. amid blockages and travel restrictions as part of efforts to combat the ongoing coronavirus pandemic. .
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This contrast can be seen in the price of Brent versus Middle Eastern crudes, with the Brent-Dubai exchange for swaps.
Oman crude futures traded on the Dubai Mercantile Exchange closed at 76.48 a barrel on Monday and are up 49.8% since the end of last year, while Brent rose 53.5% over the same period.
This means that they had a discount of $ 3.05 a barrel to Brent futures based on Monday’s respective closing prices, while the discount was 74 cents at the end of the year. last.
Oman futures tend to go at a premium on Brent when demand for Asian crude is strong, as was the case in the last quarter of 2019, before the coronavirus outbreak that started in China in December of the same year.
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INDIA STILL TO RECOVER
If the aggregate demand for crude in Asia is weak, then the question becomes which countries appear to be weaker and what the prospects for recovery are.
Among the major Asian importers of crude, India appears to be lagging behind in September, with Kpler estimating its imports at 4.09 million bpd, up from 4.32 million bpd in August. Refinitiv Oil Research predicts that Asia’s second-largest crude importer will land 3.87 million barrels per day in September.
China, the world’s largest importer of crude, is expected to have sea arrivals of 9.43 million bpd in September by Kpler, which is down from 9.96 million bpd in August.
Refinitiv expects Chinese imports by sea to reach 9.86 million b / d in September, with pipeline supplies to neighboring countries rising to 964,000 b / d, for a combined total of 10.87 million bpd, slightly higher than the official August figure of 10.53 million bpd.
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China appears to be roughly stable in September, as does Japan, with Refinitiv expecting imports of 2.68 million bpd, slightly above the 2.62 million bpd in August.
South Korea, which rivals Japan for the title of Asia’s third-largest crude importer, is expected to land via Refinitiv 3.08 million bpd in September, up from 2.63 million bpd in August.
Singapore, home to three largely export-oriented refineries, is expected by Refinitiv to import 725,000 bpd in September, up from 786,000 bpd in August.
The overall message from Asia’s crude oil imports in September is that there is still little evidence of a recovery in demand in the region.
India could start importing more from October as the economy recovers from its latest coronavirus outbreak, and Japan and South Korea could also buy more crude to build up stocks of such fuels. as heating oil before the winter of the northern hemisphere.
The outlook for China is less certain, given the as yet unquantified impact of Beijing’s decision to auction off the crude from its strategic reserve.
China’s crude demand could increase with the start of new refining units and signs that small independent refiners are back in the import market, but if Beijing steps up auctions, it could dampen import demand.
(Edited by Christian Schmollinger)
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