Retail

Mega-Refiner’s Oil Buying a Bright Spot for Constrained Market


2/2
© Bloomberg. A crew man stands on the deck of the crude oil tanker ‘Devon’ as it sails through the Persian Gulf towards Kharq Island oil terminal to transport crude oil to export markets in the Persian Gulf, Iran, on Friday, March 23, 2018. Geopolitical risk is creeping back into the crude oil market. Photographer: Ali Mohammadi/Bloomberg

2/2

(Bloomberg) — A Chinese mega-refiner is snapping up barrels of Middle Eastern crude in a rare bright spot for a market hampered by dwindling import quotas after a buying spree earlier in the year.

Rongsheng Petrochemical Co.’s Singapore unit has purchased at least 7 million barrels in the spot market so far this month for delivery in December and January, according to traders who asked not to be identified because the information is private. The company is buying up crude to feed a trial run operation of its expanded refinery in Zhejiang province this quarter.

Chinese crude imports rose in September for the first time in three months as companies sought oil for new and expanding plants. Inbound shipments may struggle to reach June’s peak through the rest of the year after independent refiners used up most of their quotas. The processors, known as teapots, played an outsized role in supporting oil prices this year after a buying frenzy following a rapid recovery from the pandemic.

Rongsheng’ Singapore unit purchased medium-sour grades from the Persian Gulf — the baseload for its refinery — such as Abu Dhabi’s Upper Zakum, Qatar’s Al-Shaheen and Iraq’s Basrah Light cargoes, according to the traders. The phase 2 expansion of its Zhoushan-based refinery is expected to double processing capacity to 800,000 barrels a day.

Rongsheng Petrochemical didn’t immediately respond to an email seeking comment on the matter.

Teapots are expected to ramp up crude purchases for January-arrival, traders said, with some companies already showing interest for spot purchases.

Beijing started allowing teapots to directly import crude in 2015 as part of an effort to increase private investment in the energy industry. The independent refiners, mainly based in Shandong province, have been using light-cycle oil and diluted bitumen as alternatives to crude after running short of quota.

©2020 Bloomberg L.P.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





READ SOURCE

Leave a Reply