Global energy crisis prompts Asia to turn to US for oil
(Bloomberg) – Asian demand for US oil is rising as the energy crisis raises prices for other crudes that are valued against the global Brent futures contract.
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China and other Asian buyers have grabbed U.S. sour crude supertankers for delivery in November and are seeking more by December, traders say. Most buyers are looking for American grades that recently dropped to the lowest levels in more than a year, with added incentive after the Chinese government granted millions of tonnes of crude oil import quotas.
A large spread between Brent and West Texas Intermediate oil futures would help support higher US crude exports, said Elisabeth Murphy, ESAI Energy LLC upstream analyst for North America. WTI has been trading at least $ 3 a barrel under Brent since August, a discount that generally favors US crude exports.
Asia’s heightened appetite for U.S. crude comes after a widespread recovery in road fuel and freight activity and ahead of a winter that is likely to see increased demand for oil from the power sector. This is also happening against a global supply shortage of fossil fuels that drives up prices.
Earlier, Brent crude exceeded $ 85 a barrel on Friday after months of production cuts by OPEC and its allies in response to the pandemic. Saudi Energy Minister Prince Abdulaziz bin Salman this week reiterated the need for OPEC and its allies to take a phased and phased approach to restore production.
ESAI’s Murphy expects about 700,000 barrels per day of additional crude oil demand from Europe and Asia combined this winter due to the switch from natural gas to oil. With the help of a large rebate from WTI on Brent, U.S. crude exports this month are expected to reach 3.1 to 3.2 million barrels per day, up from around 2.6 million last month, a she declared.
With the United States also entering its winter soon, increased demand overseas would mean more competition for American refiners. Hurricane Ida has already caused a loss of 30 million barrels of local supply, with part of the production not expected to return until next year.
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