LAUNCESTON, Australia, Sept 28 (Reuters) - Asia's crude oil
imports are set to decline for a second month in September as
the world's top-importing region continues to lag the demand
recovery in other parts of the world.
Seaborne imports in Asia are expected to decline to 31.71
million barrels per day (bpd) in September from August's 32.34
million bpd, according to data compiled by commodity consultants
If the final outcome for September is in line with Kpler's
current estimate, it will be the second-weakest month for Asia's
crude oil imports so far this year on a barrels per day basis,
beating only July's 30.91 million bpd.
September is usually a soft month for imports in Asia as the
month falls between the summer and winter peaks, but this
September's imports are also down on the 32.12 million bpd from
the same month in 2020, and the 32.33 million bpd for September
Asia's lacklustre imports stand in contrast to strongly
rallying crude oil futures, with the global benchmark Brent
contract settling at $79.53 a barrel on Monday, the
highest since October 2018.
The paper crude market is being driven higher by media
reports of an energy crisis in Europe, highlighted by shortages
at petrol stations in Britain, and the ongoing outages of
production in the U.S. Gulf of Mexico after Hurricane Ida.
The situation in Asia is quite different, with physical
traders reporting no shortage of available cargoes and refiners
reluctant to buy more crude, given demand for refined fuels in
many countries remains subdued amid lockdowns and travel
restrictions as part of efforts to combat the ongoing
This contrast can be seen in the pricing of Brent compared
to Middle Eastern crudes, with the Brent-Dubai exchange for
swaps <DUB-EFS-1M>, a measure of Brent's premium to Dubai crude,
ending at $4.30 a barrel on Monday, the highest since July 7.
Oman crude futures traded on the Dubai Mercantile Exchange
ended at 76.48 a barrel on Monday, and are up 49.8% since
the end of last year, while Brent has rallied 53.5% over the
This means they were at a discount of $3.05 a barrel to
Brent futures based on Monday's respective closing prices, while
the discount was 74 cents at the end of last year.
Oman futures tend to switch to a premium to Brent when Asian
crude demand is strong, as it was in the last quarter of 2019,
prior to the coronavirus outbreak that started in China in
December of that year.
INDIA YET TO RECOVER
If Asia's total crude demand is soft, the question then
becomes which countries are looking weakest, and what are the
prospects for their recovery.
Among major Asian crude importers, India looks to be lagging
in September, with Kpler estimating imports of 4.09 million bpd,
down from August's 4.32 million bpd. Refinitiv Oil Research is
forecasting Asia's second-biggest crude importer will land 3.87
million bpd in September.
China, the world's biggest crude importer, is forecast to
have seaborne arrivals of 9.43 million bpd in September by
Kpler, which is down from August's 9.96 million bpd.
Refinitiv expects China's seaborne imports at 9.86 million
bpd in September, with pipeline supplies from neighbouring
countries coming in at an expected 964,000 bpd, giving a
combined total of 10.87 million bpd, slightly higher than the
official August figure of 10.53 million bpd.
China looks to be roughly steady in September, as is Japan,
with Refinitiv expecting imports of 2.68 million bpd, slightly
higher than August's 2.62 million bpd.
South Korea, which is vying with Japan for the title of
Asia's third-biggest crude importer, is expected by Refinitiv to
land 3.08 million bpd in September, up from 2.63 million bpd in
Singapore, home to three largely export-orientated
refineries, is expected by Refinitiv to import 725,000 bpd in
September, down from August's 786,000 bpd.
The overall message from Asia's crude oil imports in
September is that there is still little evidence of a recovery
in demand in the region.
India may start to import more from October onwards as the
economy recovers from its latest coronavirus outbreak, and Japan
and South Korea may also buy more crude in order to build up
stocks of fuels such as heating oil prior to the Northern
The outlook for China is less certain, given the yet to be
quantified impact of Beijing's decision to auction crude from
its strategic reserve.
China's crude demand may increase with the start up of new
refining units and signs that smaller, independent refiners are
once again in the market for imports, but if Beijing steps up
auctions that could dampen import demand.
(Editing by Christian Schmollinger)