NEW YORK / SINGAPORE (Reuters) – US crude oil shipments to China will rise sharply in the coming weeks, US traders and brokers and Chinese importers said, as the world’s major economies prepare to review a deal January after a protracted trade war.
FILE PHOTO: A sea barge is loaded with crude oil from the Eagle Ford Shale formation at the port of Corpus Christi, Texas, April 10, 2014. REUTERS / Darren Abate
Chinese state-owned oil companies have tentatively booked tankers to transport at least 20 million barrels of U.S. crude for August and September, people said, in moves that could allay U.S. fears that purchases from the U.S. China is moving well below purchase commitments under Phase 1 of the trade agreement.
China had emerged as a major buyer of US crude, taking $ 5.42 billion in 2018 before trade tensions nearly brought flows to a halt.
In January, China pledged to buy $ 18.5 billion worth of energy products, including crude oil and natural gas, from its 2017 level, for a total value of around $ 25 billion. this year.
Its purchases of crude in the United States through June 30 totaled $ 2.06 billion, according to US Census Bureau data, reflecting the slowdown in the COVID-19 pandemic and the limited impact of the deal. phase 1.
However, there has been a recent surge in purchases by Chinese state-owned oil and gas company PetroChina (601857.SS) and its largest refiner Sinopec Corp (0386.HK), people said.
A review of the U.S.-China trade deal originally slated for Saturday will be delayed due to timing issues, and no new date has yet been agreed, Reuters reported.
Already, a monthly record 32 million barrels of US oil is expected to reach China in August, according to data from Refinitiv Eikon.
TANKS RESERVATIONS ARE RISING
New tanker arrivals, or tentative reservations, to China have jumped even as current oil prices in other parts of the world may be more favorable for its buyers, the people said, who could not be told. identified because they are not authorized to speak with the media.
The two Chinese companies have each reserved five to six supertankers, each capable of holding 2 million barrels of oil, for loadings in August and September. US exporters of Occidental Petroleum crude (OXY.N), Equinor (EQNR.OL) and Vitol, each chartered one or two ships, depending on shipping sources.
PetroChina plans to purchase 3 million tonnes (about 22 million barrels), or nearly $ 1 billion, of U.S. crude by the end of the year, according to a person briefed on the matter.
“Demand in China has grown since COVID-19 restrictions began to be lifted,” an Equinor spokesperson said, declining to comment on volumes or reservations.
Sinopec, PetroChina and Occidental did not respond to requests for comment. Vitol declined to comment.
The new deals are meant to show that China is still aiming to meet its purchasing target, people familiar with the matter said.
“It’s certainly politically motivated because there is a plethora of barrels being offered to Asia cheaper than what WTI lands,” said one trader, referring to US benchmark West Texas Intermediate crude.
Chinese buyers have purchased other products. On Thursday, they struck deals to buy 197,000 tonnes of US soybeans, the seventh day in a row the government announced a sale to the world’s largest buyer of oilseeds.
“It is a mandate from above, even though PetroChina’s refining system does not favor US crude as it is quite fully engaged in imports from the Middle East and beyond,” said one of the sources.
PetroChina has so far reserved around 10 million barrels of US oil in August and September, said Emma Li, senior crude analyst at Refinitiv.
“The crude of choice for China is now apparently US crude, which supports US markets and potentially helps weaken oil markets in Europe and Asia,” said Scott Shelton, energy specialist at the broker. United ICAP.
(GRAPHIC: US crude exports to China surge – here)
Reporting by Devika Krishna Kumar in New York and Chen Aizhu in Singapore; additional reporting by Shu Zhang in Singapore; Edited by Marguerita Choy