U.S. Crude Liftings for Asia to Hit New High in July

Posted by Joseph Keefe
Wednesday, May 16, 2018
Asia's U.S. crude imports hit all-time high in May as WTI discount to Brent falls to widest in three years.
The volume of U.S. crude oil arriving in Asia is expected to hit a new high in July as Asian refiners sought arbitrage supplies to replace Middle Eastern crude after prices for Gulf grades rose, traders said on Wednesday.
U.S. crude arriving in Asia hit an all-time high of close to 25 million barrels in May with cargoes discharging in China, South Korea, Singapore, India and Malaysia, according to trade flows data on Eikon.
The volume dips to about 19 million barrels in June, but is set to rebound again in July after U.S. crude futures slipped to the widest discount in three years against Brent this week, according to traders and Eikon data.
The drop in U.S. crude prices coincides with rising values for Middle East oil in Asia and has opened the arbitrage window, traders said.
Close to 10 supertankers, each carrying 2 million barrels of crude, have been lined up to load oil in the U.S. Gulf Coast for Asia, two of the traders said. These are expected to arrive in July, they said.
"WTI Midland is coming across," a third trader said, adding that refiners such as JXTG Nippon, SK Energy and Cosmo Oil have bought U.S. crude.
Last week, Indian state-refiner Indian Oil Corp (IOC) bought 3 million barrels of Louisiana Light Sweet and WTI Midland crude for loading in June.
South Korea's second-largest refiner GS Caltex has bought 5 million barrels of U.S. crude, mainly Eagle Ford and WTI Midland, for June to August delivery, up from 4.75 million barrels in the first five months this year, a company spokesman said.
Some of the popular U.S. grades in Asia such as WTI Midland, Mars and Southern Green Canyon can now compete with Middle East grades such as Murban and Oman in Asia, traders said.
WTI Midland crude delivered to North Asia is priced at a premium of close to $5 a barrel to Dubai quotes, comparable with Abu Dhabi's Murban, while Mars crude cargoes are being offered at $1.50 a barrel above Dubai quotes, competitive with Oman, they said.
Light sweet WTI Midland comes from the Permian basin, a region which was a key contributor to record shale oil production in June. The grade's cash discount hit the lowest in four years earlier this month.
"The value for Midland is better than Murban for cargoes landing in China," a trader with a Chinese company said, adding that the influx of U.S. oil supplies may put some downward pressure on Middle East crude prices.
The Middle East crude market has been underpinned by supply cuts by the Organization of the Petroleum Exporting Countries, peak summer demand and as fears of disruption in Iranian supplies after the United States withdrew from a global nuclear pact fueled sentiment.
By Florence Tan
Categories: Contracts Energy Finance Logistics Middle East Ports Tankers

Related Stories

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Japanese Oil and Gas Firm Enters Two Blocks off Malaysia

Woodside Agrees Long-Term LNG Supply with Petronas Unit

Chuditch Gas Field Drilling Ops Get Delayed to Next Year

Fugro Expands Geotechnical Testing Capabilities in Indonesia

UK Firm Secures Exploration Extension for Two Blocks off Vietnam

ABL Lands Work on BP’s Indonesian Gas and CCUS Project

‘Ultra-Mega’ Offshore Deal for L&T at QatarEnergy LNG’s North Field Gas Scheme

Current News

One Shelf Drilling Rig Up for New Job in India, Other for Disposal

Four Jack-Up Drilling Rig Deals Set to Bring In $129M for Borr Drilling

PTTEP Hires Velesto’s Jack-Up Rig for Drilling Campaign off Malaysia

Yinson Production Secures $1.17B Refinancing for FPSO Maria Quitéria

Centrica and Thailand’s PTT Ink Long-Term LNG Supply Deal

Petrovietnam, Partners Sign PSC for Block Off Vietnam

Japan Protests China’s New Oil and Gas Construction Activities in East China Sea

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

Thailand's PTT to Buy LNG from Glenfarne's Alaska LNG Project

Woodside and Jera Agree LNG Cargoes Supply for Japan’s Winter Period

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com