DOHA: Asian buyers are snapping up oil at higher prices than last month as a physical market rally gathers pace on Chinese and Indian demand.
Russian Espo crude for end-January to early-February loading fetched US$3.20 to US$3.50 a barrel over its benchmark price this week, according to traders who asked not to be identified.
That’s up from US$2.70 to US$2.90 last month.
Supplies of Qatar’s Al-Shaheen for February sold for around US$1.30 above the Dubai price, compared with an average premium of 75 cents in the previous month.
Chinese daily refining rates rose to a record for a second straight month in November, while several Indian processors are operating at close to 100% capacity on the back of stronger gasoline and liquefied petroleum gas demand.
The recovery is uneven, however, with South Korean crude imports falling to a 10-year low last month as the virus stages a comeback in the nation.
Spot trading activity has been brisk this month with at least one Chinese independent refiner and Indian Oil Corp, the country’s biggest processor, getting ahead of the crowd to secure cargoes.
Rongsheng Petro Chemical Co, one of the most active spot market buyers since its refinery expansion earlier this year, bought cargoes from as far away as the US and the North Sea.
In an indication of the strong Asian demand, the front-month timespread for Middle Eastern benchmark Dubai crude is 60 cents a barrel in backwardation, a bullish structure where near-dated prices are higher than later-dated ones, PVM data show.
The spread was in contango as recently as early November.