Tankers carrying North Sea crude.
Photographer: Chris Ratcliffe / Bloomberg
Photographer: Chris Ratcliffe / Bloomberg
Asian oil refiners have been in a hurry to buy crude shipments from Europe following Saudi Arabia’s surprise decision to cut production unilaterally in February and March.
Unipec, China’s largest oil astronaut trading arm Sinopec Group, bought four North Sea crude shipments at a price window set on Thursday by S&P Global Platts. The spree buying helped window trading to hit the busiest in at least 12 years and brought this week ‘s Unipec purchase to seven loads.
Saudi Arabia, the world’s leading oil exporter, shocked global oil markets on Tuesday by announcing a plan to go it alone with production cuts of 1 million barrels per day through March when there was a high volume of cargo -trade on expecting more supply. The kingdom then adopted the official selling prices, or OSPs, for raw sales to Asia. Next month, its famous Arab light level will be at its highest level since August.
“It is dependent on the Saudi cut and the increase due to their February OSP to Asia,” Tamas Varga, an analyst at bankruptcy of PVM Oil Associates Ltd., said of the increase in purchases.
It is not just the North Sea that has attracted much interest. Asian traders seem to have already bought four or five loads of raw CPC Blend for loading in February even before next month’s loading program is released. In January, they seized seven consignments of the size taken from a Russian building in the Black Sea.
There have been signs throughout the oil market of traders expecting tighter supply following Saudi cuts. The shape of the Brent curve futures returned earlier in the week, resulting in faster trading prices at high prices. The structure reflects corporate-market tightness. At one time, it was trading at its strongest level since March.
Most of Saudi Arabian crude exports are sold to Asia.