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Asia to Buy 49 Cargoes of West African Crude for August Loading

By on July 22, 2011

Asian refiners plan to buy 49 cargoes of crude from West Africa for loading next month, a survey of five traders involved in the transactions showed.

Shipments totaling 46.7 million barrels, or 1.51 million barrels a day, will be exported from Angola, Nigeria, Republic of Congo and Equatorial Guinea, according to the poll and an analysis of monthly loading programs obtained by Bloomberg News. Chinese refiners will import 24 cargoes accounting for 49 percent of total purchases from Asia, while 32 percent of shipments are destined for India, the survey showed.

More West African crude is likely to be shipped to Asia and Europe as refiners in North Americacut their purchases to use the emergency stockpile released from the International Energy Agency, according to JBC Energy GmbH. About 4.5 million barrels a week will be pumped out of the U.S. Strategic Petroleum Reserve over six weeks starting in July, the IEA said yesterday. The agency announced the release of 60 million barrels after exports from Libya were choked by an armed rebellion.

“The imminent release of 30 million barrels of light-sweet crude in the U.S. Gulf Coast has led to a lack of U.S. buying interest, significantly boosting availability of West African crude for other regions,” analysts at the Vienna-based consultants led by Johannes Benigni said in a July 20 note.

Brent-Dubai Spread

The difference between Brent futures and Dubai swaps, which measures the European benchmark against the Persian Gulf grade, for next month delivery reached a five-month low of $3.60 on June 24, according to data from PVM Oil Associates.

The spread averaged $5.60 a barrel from June 16 to July 14 when August was the front-month contract. Traders make more profit from shipping West African crude to Asia when the spread between the two contracts shrinks.

Most Nigerian and many Angolan grades are trading at lower premiums to Dated Brent, used to price more than half of global oil, than in the weeks before the Libyan civil war as extra oil from the IEA release works its way into the market, JBC said.

Nigeria plans to export 2.26 million barrels a day of crude next month and Angola will ship 1.61 million barrels, according to Bloomberg calculation based on loading programs.