China's crude oil buying will push its February loadings of West African crude to their highest in at least 13 years, a Reuters survey a showed on 3 February
Buying for China, led by state-run Unipec and Sinochem, hit a total of 40 cargoes for February loading. At a level of 1.36mn bpd. This is the highest since the Reuters survey of traders and shipping data began tracking the shipments in 2004.
According to Nasdaq, the purchases boosted overall shipments to Asia from West Africa to 2.31mn bpd, their highest since April 2015, and 28 per cent above the previous month on a bpd basis. The buying was driven in part by a narrow spread between Brent and Dubai crudes, which makes West African grades more competitive in Asia. Michal Meidan, Asia analyst with Energy Aspects, said the figures were "not overly surprising given the OPEC production cuts and Asia's need for alternative barrels". Production cuts of 1.8mn bpd by the Organization of the Petroleum Exporting Countries (OPEC) and other oil producers have sent refineries scrambling to source alternative medium and heavy crude oil. Falling oil output in China has intensified the need for alternatives.
Meidan added that "Chinese buyers are also stocking up in anticipation of higher oil prices in the second half of the year. The Chinese buying centred on Angolan crude, with less than a dozen cargoes of the loading plan from that nation sailing to destinations outside Asia. But China's state-run refineries also bought one cargo of lighter oils, including Nigeria's Bonga and Akpo condensate. Other Asian buyers have also boosted purchases of light sweet oil, including Nigerian grades, pushing regional grades lower."