W Africa crude exports to Asia to fall in June

ABUJA (Commodity Online) : Major Asian oil buyers including India and China bought comparatively less loads of West African oil in June.

According to reports, Indian, Chinese Taiwanese and Indonesian end-users bought a total of 1.65 million barrels per day (bpd) of crude from the oil-exporting region in 52 full or part cargoes, down from 1.72 million bpd in 56 cargoes in May.

Traders said a steady rise in outright crude oil prices through March and into April, when most of the spot crude trades were concluded, encouraged Asian buyers to turn away from expensive long-haul imports and switch to alternative grades.

A widening of the price spread between North Sea Brent and Dubai crude oil also encouraged a switch by Asian buyers away from West African grades.

West African crude oil is priced against a North Sea physical benchmark linked to Brent, and when this is strong it can make West African barrels more expensive for Asian buyers compared with local and Middle Eastern grades priced on Dubai.

Another factor discouraging long-haul imports to Asian destinations was an increase in freight rates during April as the cost of moving an oil tanker from Africa's Atlantic coast to China rose by almost a third.

Asian imports of West African crude will average around 1.72 million bpd in the first half of this year, well above the 1.26 million bpd average for the first six months of last year. Asian imports from the region hit a record of around 1.9 million bpd in January this year.

Initial indications from trade sources and shippers suggest that Asian imports of West African crude will rebound sharply in July as a result of a recent fall in outright crude oil prices.

So far for July loading, Asian buyers have committed to take at least 45 full or part-cargoes from Angola and other West African oil producers such as Equatorial Guinea and Congo.