A record volume of U.S. crude oil is set to arrive in China and the rest of Asia this month as buyers rushed to snap up cheap oil earlier this year, Refinitiv’s tanker-tracking and port data showed.
According to Reuters columnist Clyde Russell, the most likely reason for the all-time high Asian imports of crude from America is the cheap oil prices in March and April, when oil prices were half what they are today.
The cargoes bought in March, April, and May are set to arrive in July and August, so it is no surprise that Asia’s imports of U.S. crude oil are set to smash records this month.
According to Refinitiv data, Asia as a whole is expected to import a record 1.86 million barrels per day (bpd) of American oil this month, compared to the previous record of 1.36 million bpd imported in October 2019.
Among Asian buyers, China is leading the way, after its oil refiners rushed to buy ultra-cheap spot cargoes in April, taking advantage of the deep discounts at which many crude grades were being offered to China with non-existent demand elsewhere.
China is expected to import around 1.1 million bpd of U.S. crude oil in July, according to Refinitiv estimates. This would be more than double the previous record of Chinese imports from the U.S. of 466,000 bpd in June 2018, just before the two biggest economies started the trade war.
The high imports of U.S. crude oil in Asia are likely to continue in August until all cheap cargoes arrive, but after that, nominations seem to have dropped off, as oil prices rose.
Despite the expected record imports of U.S. crude in July, China is nowhere near achieving its target for energy purchases from the United States under the Phase 1 trade deal, and with oil prices double compared to April and demand still weak in Asia, the Chinese buying spree – including of U.S. oil – may be coming to an end.