09-05-2018

W.African May oil exports to Asia rally, but demand worries persist

West Africa’s crude oil loadings for Asia are expected to bounce back in May from a five-month low, a Reuters survey of shipping fixtures and traders showed on Tuesday, but traders warned that shaky demand in China could signal a tough road for some of the cargoes.

Loadings for Asia are set to rise by more than 9 percent in May, to roughly 2.1 million barrels per day (bpd), from April’s five-month low of 1.9 million bpd.

A backlog of cargoes outside Chinese ports in early April had limited shipments loading in that month, and refinery maintenance at several key units in the world’s largest oil importer also cut demand.

But traders warned that some of the cargoes that will sail east in May have yet to find homes with consumers, meaning demand is shakier than the arbitrage figures would suggest.

Behemoth buyer Unipec has been offering five May-loading West African cargoes on a delivered basis at the teapot refinery hub of Shandong.

Unipec has offered Angolan Cabinda, Mondo, Kissanje and Saturno and Congolese Djeno for delivery in June and July, and traders said their offer levels were below what other sellers could afford to do and still make any kind of margin.

This could make it tougher for others to place cargoes in the region.

Still, Indian refiners showed renewed interest in West African oil, with private company Reliance joining state-controlled IOC in booking cargoes.

Reliance took at least two cargoes of Nigerian Agbami, while IOC bought a mix of Nigerian, Angolan and Congolese crude.

Two cargoes, an Agbami and one Angolan grade, were also booked to sail for Australia, while Thailand’s PTT also booked one cargo.

 COUNTRY      May        BPD '000s  April      BPD
              cargoes               cargoes    '000s
 CHINA        38         1,165      34         1,077
 INDIA        18         552        14         443
 INDONESIA    3          92         4          127
 TAIWAN       2          61         2          63
 JAPAN        0          0          0          0
 S. KOREA     0          0          0          0
 OTHERS       7          215        6          190
 TOTAL        68         2,084      60         1,900

Source: Reuters

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