Unusually aggressive crude buying by a Chinese state trader has raised worries over whether there is enough supply to sustain a pricing process that yields the main benchmarks for the more than 12 million barrels per day of oil sold in Asia. <\/p>\n
Deals on Monday between Chinaoil and Unipec – units of two Chinese oil giants – saw the former buying a record 10 cargoes, or 5 million barrels, during the Platts Dubai Market on Close (MoC) process on the first trading day of August. <\/p>\n
The speed at which Chinaoil, trading arm of PetroChina, is buying crude has alarmed some traders in Asia. The seller Unipec is the trading unit of Asia’s largest refiner, Sinopec. <\/p>\n
If the trade continues at 10 cargoes per day, then all the available cargoes could be finished by next week, a Singapore-based trader said. “What will happen if all the physical cargoes are exhausted?” <\/p>\n
The worry is that once the cargoes were traded, a bidder could push prices higher knowing that no more acceptable MoC grades were available. <\/p>\n
“Chinaoil will be able to bid at $100 even when Brent <\/p>\n
is at $51, because nobody has a cargo to deliver to him,” the trader said. <\/p>\n
Platts was not immediately able to respond to questions about what would happen if all volumes of the approved grades were sold out so early in the month. <\/p>\n
In the MoC process that Platts uses to assess the Dubai and Oman benchmarks, sellers have to deliver a 500,000-barrel cargo for every 20 Dubai partials or trading lots sold to a counter party. Crudes approved for delivery are Dubai, Oman and Upper Zakum as they are among the few grades that trade freely. <\/p>\n
But only three Dubai cargoes are now produced each month because of declining output at the field, traders said. <\/p>\n
In October last year, Chinaoil bought a record 22 Upper Zakum cargoes for December-loading, and in April this year, it took a record 49 Oman cargoes, or close to 820,000 bpd, nearly all the crude that the Sultanate produces. <\/p>\n
That means in all, a maximum 74 cargoes could be traded via the MoC system in one month based on historical transactions, although traders doubt all of the records could be repeated as some of the earlier supplies were drawn from storage. <\/p>\n
Platts, part of McGraw Hill Financial Inc, competes with Thomson Reuters in providing news and information to the energy markets.<\/p>\n","protected":false},"excerpt":{"rendered":"
Unusually aggressive crude buying by a Chinese state trader has raised worries over whether there is enough supply to sustain a pricing process that yields the main benchmarks for the more than 12 million barrels per day of oil sold in Asia. Deals on Monday between Chinaoil and Unipec – units of two Chinese oil giants – saw the former buying a record 10 cargoes, or 5 million barrels, during the Platts Dubai Market on Close (MoC) process on the first trading day of August. The speed at which Chinaoil, trading arm of PetroChina, is buying crude has alarmed some […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[133],"tags":[],"class_list":["post-27301","post","type-post","status-publish","format-standard","hentry","category-oil-gas"],"acf":[],"_links":{"self":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/27301","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/comments?post=27301"}],"version-history":[{"count":0,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/27301\/revisions"}],"wp:attachment":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/media?parent=27301"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/categories?post=27301"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/tags?post=27301"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}