(Repeats the previous story for a wider readership without editing the text. The views expressed here are those of the author, columnist for Reuters.)
LAUNCESTON, Australia, Aug.5 (Reuters) – Another month, another weak result for crude oil in Asia, the world’s most consuming region, with July imports declining for a fourth out of five months as demand s’ weakens due to high prices and the ongoing coronavirus pandemic.
Asian imports for July were valued at 21.77 million bpd (bpd) by Refinitiv Oil Research, a 10-month low and down from 23.08 million bpd in June.
The weakness was led by China, the world’s largest importer, with July arrivals estimated at 9.21 million barrels per day, a seven-month low.
Kpler, who like Refinitiv estimates crude flows using vessel tracking and port data, was slightly more bullish on Chinese imports, putting July at 9.57 million bpd.
However, data from Kpler shows that Chinese imports for July were the lowest since February of last year.
China’s imports have been constrained by lower import quotas for independent refiners, but also by processors drawing on inventories accumulated last year when the price collapsed to a two-year low. decades amid the pandemic and a brief price war between major exporters from Saudi Arabia and Russia.
India, Asia’s second-largest importer, also experienced a weak result in July, with imports falling to 3.41 million barrels per day, which, according to Refinitiv data, is the second lowest since the start of assessments in 2015.
As the crude that arrived in July was bought, India was battling a new coronavirus outbreak, which, coupled with Brent crude futures enjoying strong gains, saw refiners cut back on buying.
Brent, the global benchmark futures contract, gained 50% between the end of last year and its peak so far this year at $ 77.84 per barrel on July 6.
It has since retreated to trade around $ 70.38 a barrel in Asia on Thursday, as the market grapples with competing narratives of growing demand in North America and Europe over weakening. Asian consumption, as well as the increase in supply from the OPEC + producer group.
If you were looking for a bright spot in Asia, your best bet would be South Korea, which is expected to overtake Japan as the region’s third largest importer of crude this year.
South Korea’s July imports were valued by Refinitiv at 2.67 million bpd, up from June’s 2.65 million bpd, making it the only one of the region’s six largest importers to post a monthly increase.
Japan’s imports fell to 1.86 million b / d in July from 1.94 million b / d in June, Taiwan held steady at 820,000 b / d while Singapore slipped to 960,000 b / d against 1.06 million in June.
The overall picture that emerges is where demand from Asia simply cannot be reconciled with bullish talk.
It has been on a downward trend for all of 2021, and with several major economies in the region still grappling with the pandemic, it would be difficult to argue that a rebound is imminent.
For Asia’s crude imports to recover, demand will need to return to at least pre-pandemic levels, and this will only happen when economies are fully reopened and regional travel resumes.
The slow rollout of immunization in many Asian countries is incompatible with the region’s economies fully reopening anytime soon, which means demand for crude could be reduced for several months to come.
However, if the additional supply from OPEC +, which agreed to add 400,000 bpd per month from August to December, serves to lower prices, it will help stimulate demand from Asia, especially from importers. sensitive to prices such as India and China.
Edited by Christian Schmollinger