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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Oil Buyers’ Market In Asia Set To Continue

With all the oversupply concern among oil traders, the buyers’ market in Asia is likely to remain strong this year, S&P Global Platts reports today, citing local traders.

Everyone who produces oil is looking eagerly for buyers in Asia as the United States produces ever-growing volumes of light crude that has pressured premiums for these grades, making them more attractive for refiners compared with grades tied to the Dubai/Oman benchmarks.

"Arbs [are] wide open and expected to remain so for next year," S&P Global Platts quoted one Singapore trader as saying, adding data from its trade flow software cFlow showed that the U.S. exported 1.1 million bpd of crude to Asian countries in November, when production reached an all-time high of 11.7 million bpd. This compares with 627,000 bpd a year earlier.

This year, however, more U.S. crude is expected to go to European refiners, freeing up attractively priced European light crude for Asian buyers. That’s bad news for Middle Eastern producers, for whom Asian refiners are a key market. As oil prices remain stubbornly lower than desirable for these oil-dependent economies, Middle Eastern producers may turn out to be the losers in this buyers’ market, S&P Global Platts notes.

Most crude from the Middle East to refiners in China, Japan, and South Korea flows there under long-term contracts, but the buyers have options to diversify and they might exercise this option more willingly now that alternative sources are priced more attractively. This, in turn, is leading to price cuts from Middle Eastern producers and other moves to maintain market share.

Meanwhile, sellers got some bad news from China this week: Beijing issued the first crude oil import quotas for local independent refiners, and these were lower than the corresponding quotas for 2018, Reuters reported yesterday. The agency adds, however, that traders expect quotas to rise further later in 2019.

By Irina Slav for Oilprice.com

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