Column: Asia’s crude oil imports to rebound in November amid uncertainty over RPD: Russell

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LAUNCESTON, Australia, November 25 (Reuters) – Asia’s crude oil imports are likely to have rebounded in November to reach their highest level this year amid pre-winter purchases by major consumers and despite widespread concern from buying countries about the high prices.

Imports from the world’s most consuming region are estimated at 26.35 million barrels per day (bpd) for November by Refinitiv Oil Research, up sharply from October’s 22.55 million bpd.

For most of the year, Asia’s crude imports did not follow the dominant global narrative of a recovery in demand and limited supply in the market, with these factors applying more to North America and Europe.

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However, a rush to secure fuel supplies ahead of the Nordic winter has prompted refiners in Asia to purchase more crude for delivery in November, with all major importing countries expected to increase arrivals.

China, the world’s largest buyer of crude, is expected to import 10.47 million b / d in November, up from 8.9 million b / d in October, which was the lowest since September 2018.

However, some factors at play call into question whether the resurgence of Chinese imports in November is a flash in the pan or the start of a new uptrend.

Imports were likely boosted by the government granting new quotas to some independent refiners, which were to be used up by the end of the year.

This has led to a flood of purchases from these refiners, especially Russian ESPO crude, which has seen cash premiums for quality reach their highest level since January 2020.

The ESPO premium on Dubai crude hit $ 6.35 a barrel on November 16, after climbing from a recent low of $ 1.90 on August 17.

However, it then fell back to around $ 4.10 a barrel amid moderate interest from Chinese independents in loading cargoes in January.

Another factor that may affect China’s imports in the first quarter of next year is the ability to sell more oil from the Strategic Petroleum Reserve (SPR).

Beijing has so far been hesitant about its intention to join the US-led release of crude stocks, saying on Wednesday it was working on its own release based on its own needs. Read more

By failing to make a firm commitment to release crude from its SPR, China is creating uncertainty in the market about its future import needs, although Beijing is likely to take action as the message has been clear. that the authorities think oil prices are too high.

SPR UNCERTAINTY

India, Asia’s second-largest importer of crude, has pledged to release 5 million barrels of its SPR, which, if delivered within a month, would amount to around 161,000 bpd, assuming a 31-day month.

That wouldn’t make too much of a difference for India’s overall imports, which Refinitiv says will hit 4.41 million bpd in November from 4.04 million bpd in October, and the highest since April.

Japan, Asia’s third-largest crude buyer, will release “several hundred thousand kiloliters” from its SPR, media outlet claiming this would amount to around 4.2 million barrels, a figure that is not quite two days old. of request. Read more

Japanese imports in November are expected to reach 3.04 million bpd, up from 2.54 million bpd in October and the highest since March 2020.

South Korea, Asia’s fourth-largest crude importer, will also join the U.S. initiative, but has yet to confirm how much oil it will release from reserves.

Its November imports are estimated at 2.95 million bpd, a 22-month high and up from October’s 2.70 million bpd.

Overall, Asia’s crude oil imports in November reflect stronger demand ahead of winter and an ongoing recovery from the worst of the coronavirus pandemic.

The unknown factor is how much oil will be released by the SPRs of major importers in the region and over what period.

GRAPHIC: Crude Oil Imports in Asia Relative to Brent Price: https://tmsnrt.rs/3cIcpVc

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Editing by Stephen Coates

Our Standards: Thomson Reuters Trust Principles.

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