Oil major Shell has snapped up over 8 million barrels of June-loading crude oil grades from the Middle East and Russia and has resold some of the cargoes in Asia, taking advantage of the strong Asian demand, Reuters reported on Friday, citing five trading sources.
Wider Brent premium over the Middle Eastern benchmark Dubai this month has made Atlantic crude oil supplies more expensive than the Middle Eastern and Russian supplies, which are priced off the Dubai benchmark.
According to two of Reuters’ sources directly involved in the trades, Shell has bought six cargoes of Qatar Marine, four cargoes of Upper Zakum, three cargoes of Russian Sokol, and at least one Banoco Arab Medium and one al-Shaheen cargo from various sellers.
The Anglo-Dutch oil major has resold one of the Qatar Marine cargoes to a customer in Thailand at a premium of more than US$0.20 per barrel to the official selling price (OSP) of the grade, compared to premiums of between US$0.10 and US$0.20 a barrel in previous deals, Reuters sources said.
Shell’s oil cargo acquisitions have reduced the spot availability, and for some of the crude grades, Shell is the only seller, according to Reuters’ sources.
Demand in Asia is strong, and some analysts believe that it’s stronger than expected, even though oil prices have risen.
According to Thomson Reuters Eikon trade data, Asia’s seaborne imports of crude oil will hit a record in April, with China likely to import more than 9 million bpd this month, possibly setting a record. This robust demand, even amid the maintenance season, points to Chinese oil demand growth even stronger than expected.
“Chinese demand points to strong growth,” Reuters quoted Goldman Sachs as saying in a note to clients. Demand growth may be “higher than currently estimated,” according to Goldman.
Some analysts in Asia don’t expect refineries across the region to reduce imports or cut refinery rates because of the high oil prices, but some traders expect major overhauls at some Chinese refineries in May and June.