You are here

Asia-Pacific crude: China's buying momentum slows

[SINGAPORE] The Asia-Pacific crude market remained under pressure on Tuesday as a US$10-per barrel increase in oil prices in the past three weeks dampened Chinese appetite.

The rise in Brent oil prices to more than US$40 per barrel could slow down shipments to China, the world's second-largest oil consumer, in the second quarter, after imports hit a record in February, trade sources said on Tuesday. "Such high outright prices will impact demand," said a source with an independent Chinese refiner, also known as"teapots". "China's crude inventories are very high so we are likely to draw down stocks first and keep a watch on prices," the source said.

China's imports have so far been supported by low oil prices that have driven stockpiling, as well as buying by a new group of domestic refiners who have received import quotas.

Strong Chinese demand for Russian ESPO has pushed up the grade's spot premiums in recent months, but premiums for April-loading spot cargoes traded last week have dropped about US$1 from the previous month.

sentifi.com

Market voices on:

Arbitrage inflows also weighed on regional grades, with shipments of North Sea Forties crude to Asia potentially hitting their highest in over two years in March.

Provisional Reuters shipping data shows a total of five supertankers have been fixed to carry Forties to Asia this month, making a total of 10 million barrels.

Kuwait will commit to a potential global oil production freeze only if major oil producers, including Iran, agreed to join the pact, the Gulf Opec member's acting oil minister said on Tuesday.

Royal Dutch Shell has paid 1.77 billion euros (US$1.94 billion) it owed the National Iranian Oil Co, settling debts after sanctions against the country were lifted in January.

US shale oil production in April is expected to chalk up the second-largest monthly decline on record, and the sixth straight monthly decrease, a US government forecast showed.

REUTERS

Powered by GET.comGetCom