04-07-2016

Asian buying of West African crude to edge higher in July

crude

Loadings of West Africa oil heading for Asia are set to edge higher in July, supported by firm demand for Angolan oil from China and India, a Reuters survey of shipping fixtures and traders showed.

The roughly 1.7 million barrels per day (bpd) scheduled to sail east in July as of now could well move higher, shipping sources said, as some buyers are waiting to book vessels amid weakening freight costs.

Already, the volume for July is higher than an eight-month low of 1.647 million bpd booked for June loading, which suffered from a recoil in buying of Nigerian oil as a result of force majeure and uncertainty in the country.

India’s IOC has booked several grades of Angolan crude for July, including Cabinda and Girassol, as its favoured Nigerian Qua Iboe crude oil was under force majeure when the purchases were made.

“People want stable supply. And Angolan crude is in general very reliable … there are no fears about force majeure,” said Ehsan Ul-Haq, a principal consultant with KBC.

China’s buying has also skewed toward Angolan grades, though state-backed refining company Unipec and teapot refiners typically process heavier crudes than India.

Sources said more bookings could yet emerge, as strong Chinese demand helped to clear out Angola’s loading programmes remarkably quickly over the past month.

“China’s teapots have also taken more Angolan,” Ul-Haq said, adding that China’s demand was boosted by demand from the country’s strategic storage sites.

Indonesian buying also returned in force, with Pertamina taking four cargoes, including those booked by Total, Shell and Socar. Thailand’s PTT also booked a cargo to load in July, but the grade was not immediately clear.

Source: Reuters

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