Middle Eastern benchmarks traded mixed on Monday, with Oman climbing while Dubai and Murban drifted lower, as the spread between Brent- and Dubai-pegged oil narrowed close to parity.
A narrower Brent/Dubai differential DUB-EFS-1M could encourage Asian refiners to buy more arbitrage cargoes from the Atlantic Basin, which puts pressure on regional light crude such as Murban.
Chinese refiners’ demand for Saudi Aramco 2222.SE crude oil for January is the lowest in five months, people with knowledge of the matter said on Monday, as higher-than-expected prices prompted buyers to seek cheaper supply.
About 40 million barrels were nominated by Chinese refiners for January loading, down from about 46 million for December, trading sources said, the lowest nominated volume since August.
China’s state-backed Unipec has likely bought around 20 million barrels of Brazilian crude for February arrival, according to market sources.
Meanwhile, to address the insufficient feedstock issue, Chinese teapots, as independent refineries are known, have been given permission by Beijing to apply for 2024 crude oil import quotas in advance, according to three market sources. But, the quotas can only be consumed before the end of 2023 and will expire unless they are fully used up.
“The policy does not mean much to us. There is not enough time to bring in new cargo, as the quota will only be valid for two weeks. It would be too wasteful for the precious quota to go invalid,” said one teapot source.
The market expects the Chinese government to issue the first official batch of 2024 crude import quotas in late December.
SINGAPORE CASH DEALS
Cash Dubai’s premium to swaps fell 9 cents to $0.43 per barrel.
NEWS
Sellers of sanctioned oil from Russia and Iran are hiking offer prices to China after Venezuelan crude rallied following the suspension of U.S. sanctions on the South American producer, trade sources said.
The U.S. Department of Energy on Friday said it wants to buy up to 3 million barrels of crude oil for the Strategic Petroleum Reserve (SPR) for delivery in March 2024, as it takes advantage of lower prices to start replenishing its stockpile.
U.S. energy firms this week added oil and natural gas rigs for a fourth week in a row for the first time since November 2022, energy services firm Baker Hughes BKR.O said in its closely followed report on Friday.
The Dangote oil refinery in Nigeria on Friday received its first cargo of 1 million barrels of crude oil from Shell International Trading and Shipping Co (STASCO), bringing the start of operations closer after years of delays.
Source: Reuters (Reporting by Muyu Xu; Editing by Tasim Zahid)