Deliveries of U.S. crude oil to Asia are set to touch a record 1.8 MMbbl/d this month, Kpler shipping data showed, as demand climbed on a widening discount to global oil.
Refiners in China, India and South Korea are returning as big U.S. crude oil buyers after several months of scooping up cheap Russian barrels. Asia's renewed buying reflects soaring demand for crude to produce diesel fuel and comes as Europe continued to stock up in the aftermath of western sanctions on Russian purchases.
Overall, U.S. crude exports last week touched a weekly record of 5.1 MMbbl/d, boosted by higher shale production. The U.S. benchmark WTI traded at a nearly $9 a barrel discount to global Brent, compared to a $6 discount at the start of September. A wider discount makes U.S. oil more affordable to foreign buyers.
South Korea is set to import a record 619,000 bbl/d of U.S. crude oil, according to Refinitiv, becoming the month's top Asian importer of U.S. crude.
China will draw at least 450,000 bbl/d, its highest since December 2020, while India's demand is forecast to be the highest since March, Refinitiv data showed. Both are rising in the face of higher tanker rates up about 40% on some segments in October.
China's refineries are stepping up production with the end of maintenance overhauls and receipt of higher fuel export quotas to lift sagging merchandise exports.
There is also strong global demand for diesel that is encouraging refiners across the region to add production runs, said Matt Smith, analyst at data firm Kpler.
"With Asian refiners set to ramp up refinery runs, with China's sizeable product export quota, and with OPEC's core producers dialing back on output, demand for U.S. crude is strong," he said.
OPEC and its allies this month began cutting output by 2 MMbbl/d on fears of lower demand amid slowing economies.
U.S. oil production was 11.98 MMbbl/d in August, the latest month of official figures, as producers raise activity after pandemic cutbacks.
"Despite rising freight costs, U.S. crude is still economical for Asian buyers, and the buying interest would remain as long as the arbitrage window is still open," a trader said.
Recommended Reading
What Chevron’s Anchor Breakthrough Means for the GoM’s Future
2024-12-04 - WoodMac weighs in on the Gulf of Mexico Anchor project’s 20k production outlook made possible by Chevron’s ‘breakthrough’ technology.
Shell Selects SLB for Deepwater Drilling Contracts
2025-01-08 - SLB will deliver the projects in the U.K. North Sea, Trinidad and Tobago and the Gulf of Mexico, among others regions, over the next three years.
E&P Highlights: Jan. 13, 2025
2025-01-13 - Here’s a roundup of the latest E&P headlines, including Chevron starting production from a platform in the Gulf of Mexico and several new products for pipelines.
Production Begins at Shell’s GoM Whale Facility
2025-01-09 - Shell’s Whale floating production facility in the Gulf of Mexico has reached first oil less than eight years after the field’s discovery of 480 MMboe of estimated recoverable resources.
Exxon Enlists Baker Hughes to Support Uaru, Whiptail Offshore Guyana
2025-02-03 - Baker Hughes’ will provide specialty chemicals and related services in support of the Uaru and Whiptail projects in the Stabroek Block.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.