Low freight rates and production cuts by Middle Eastern Opec oil exporters have led to a big rise in sales of West African crude oil to Asia over the last two months, a Reuters survey showed. Forty-five supertankers were sailing east from West African ports this month carrying around 43 million barrels, or about 1.38 million barrels per day (bpd), of crude oil to refineries in India, China and elsewhere in east Asia.
The survey of a dozen oil trading firms showed. Even more West African crude oil headed to Asia in April with around 35 Very Large Crude Carriers (VLCCs) going just to Chinese buyers. The total for cargoes going to China last month has been revised upwards from a previous estimate of 24 after a review of industry data.
One third of all the crude oil exported from West and central African countries this month has been sold to Asian buyers, the survey showed, and last month the final total was as high as 38 percent of the approximately 4.25 million bpd produced by the region.
West African crude oil cargoes are usually more likely to head west or north but very high oil stocks and a fall in demand in the United States have discouraged US buying, traders say. Asian buyers have been encouraged to look at crude oil from Nigeria, Angola, Gabon and Equatorial Guinea and Congo because of a reduction in production by many Middle Eastern members of the Organisation of the Petroleum Exporting Countries.
Lower demand for tankers as a result of these Opec output cuts and the global economic downturn has helped depress freight rates and made it cheaper for Asian buyers to move crude oil long-haul down the coast of Africa and across the Indian Ocean. "A reduction in supply of Middle Eastern crudes has tended to hit Asia disproportionately," said a senior trader with a US oil company, who declined to be identified.
"It has opened up a trading window for West African oil to move east that has rarely been so wide and there is no sign that the window is closing yet," he added. A preliminary survey of cargoes heading east that are due to load in June suggests that the movement east next month could be just as high as in May with 35-40 cargoes reported to have been committed already to Asian buyers.
The surge in cargoes moving east followed a period of relatively low demand from Asia for West African cargoes. Industry sources say only around 1 million bpd of crude from the region moved east in November and that tally dropped to around 0.9 million bpd in December and January before rising to around 1.1 million bpd in February and 1.2 million bpd in March. "Asian demand was weak in the last few months of 2008 but has recovered very strongly since then," said Olivier Jakob, of energy consultancy Petromatrix. "We have now had several months of higher-than-expected flows."
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