Record West African Oil Liftings, Most Sailing East

 

Shipments of West African oil to China are set to surge to a record in January, boosting overall fixtures heading east to their highest in at least 14 years, a Reuters survey of shipping fixtures and traders showed on Wednesday.

 

China's loadings are expected to jump by more than 20 percent from December to more than 1.5 million barrels per day (bpd) in January, the survey showed. 

 

The figure is the highest barrel-per-day total to sail for China since September, and is some 37 percent above the same month last year. 

 

Traders said China's appetite was whetted in part by the first batch of government import quotas for 2018, which were issued in late December, but announced in November. This prompted some companies to book cargoes early in order to arrive as quickly as possible.    

 

Energy Aspects said a large amount of destocking in the fourth quarter, which amounted to a total drawdown of some 40-60 million barrels in China, also prompted strong demand from the

world's second-largest oil consumer. 

 

"There's certainly a large pull from China," said Michal Meidan, Asia analyst with Energy Aspects. "Demand has been good and the runs have been high. They need the crude."

 

The bookings helped to propel overall fixtures heading east to 2.39 million bpd, a record since Reuters tracking began in 2004. The previous record was in April 2015 at 2.343 million bpd, when India booked more than 1 million bpd. Still, there is fierce competition for Chinese and other Asian buyers, with U.S. crudes increasingly edging into the market, often at the expense of West African grades.

 

Supply of Russian ESPO Blend is also increasing this year. Already, PetroChina has nearly doubled the amount of Russian crude processed at its refinery in Dalian as a new supply agreement has come into effect.   

 

Additionally, Meidan said China's meteoric demand growth in 2017, which Energy Aspects pegged at roughly 800,000-900,000 bpd year-on-year, will also slow substantially in 2018, limiting new

opportunities to sell the nation oil.