U.S. crude to China set for near 2-1/2 yr high in March, spurred by a recovery in demand and competitive prices compared with Middle East supplies

[beijingwalker]

U.S. crude to China set for near 2-1/2 yr high in March, spurred by a recovery in demand and competitive prices compared with Middle East supplies​

Published Mar 16, 2023

SINGAPORE — U.S. crude exports to China in March are headed for their highest in nearly two-and-half-years, spurred by a recovery in demand and competitive prices compared with Middle East supplies.

The exports are expected to stay elevated in the second and third quarters, especially after West Texas Intermediate (WTI) U.S. crude prices slumped below $70 a barrel this week, stretching its discount to Middle East benchmark Dubai to about $10 a barrel, the widest since August, according to Reuters data and analysts.

China’s oil demand is set to rebound to record highs in 2023, leading global growth after authorities dismantled strict COVID-19 curbs. Its robust appetite will absorb rising U.S. output and crude releases from the U.S. Strategic Petroleum Reserve, supporting spot differentials for U.S. grades such as West Texas Intermediate and Mars.

“China has emerged as the de facto global swing supplier, with the capacity to absorb huge amounts of excess oil production at times of oversupply and draw down its stocks when markets tighten,” Antoine Halff, an analyst with data analytics consultancy Kayrros, said in a note.

At least 14 million barrels of crude will load in the U.S. in March for China, the highest volume since October 2020, shiptracking data from Refinitiv, Vortexa and Kpler showed. Some barrels may spill over to April, analysts said.

Of these, at least two very large crude carriers (VLCC) and one Suezmax tankers have been charted by Unipec, the trading arm of Asia’s largest refiner Sinopec, Kpler data showed. Another three VLCCs are chartered by Unipec and PetroChina to load in early April.

The supplies could include Canadian barrels exported from the U.S. Gulf Coast, analysts said.

“With flat prices dropping, China is likely to go bargain hunting, stoking further interest in U.S. barrels, particularly as China exits refinery maintenance in the latter half of Q2, driving on demand,” said Matt Smith, lead oil analyst for the Americas at Kpler, adding that the robust flows between the two countries would carry through into the third quarter.

While freight rates for VLCCs sailing from the Middle East to China started to dip this week, VLCCs rates for the U.S.-China route continued rising, indicating strong buying interest.

Mars sour crude oil on Wednesday traded at a 65-cent premium to WTI on a free-on-board basis, the highest in nearly 11 months, while prices for West Texas Sour and South Green Canyon have also climbed.

U.S. crude to China set for near 2-1/2 yr high in March, elevated to Q3 - analysts, data

SINGAPORE — U.S. crude exports to China in March are headed for their highest in nearly two-and-half-years, spurred by a recovery in demand and competitive prices c…

financialpost.com

 

[beijingwalker]

And China resell them to EU at a premium

China Sells U.S. LNG to Europe at a Hefty Profit

China resold several U.S. liquefied natural gas shipments to Europe, a rare move by the world’s top buyer that highlights how sky-high prices are rerouting trade flows.

www.bloomberg.com