Kazakhstan CPC Blend oil heads to Asia as European demand eases, sources say
Softening demand from refiners in the Mediterranean for CPC Blend crude loading in the second-half of August widened discounts for the crude by about $1 a barrel from the previous month, a London-based trader said, creating opportunity for traders to cash in on the difference.
Prices for CPC crude for delivery to North Asia are about $3.50 to just below $4 a barrel above September Dubai quotes, the sources said. This is below the cost for Murban at roughly $4.70 a barrel to Dubai quotes on a cost and freight basis (C&F), they added.
Murban, which flows mostly to Asia, is supported by lower exports as Abu Dhabi National Oil Co is diverting supplies to its domestic refinery.
Unipec, the trading arm of Asia's largest refiner Sinopec , South Korea's top two refiners SK Energy and GS Energy, and India's Reliance Industries have bought at least 1 million barrels of CPC Blend crude each, the sources said. The companies did not immediately respond to requests for comment.
A narrowing of Brent's premium to Middle East benchmark Dubai has also made Atlantic Basin grades more affordable for Asian buyers.
The Brent-Dubai Exchange of Futures for Swaps fell below $1.60 a barrel this week, on Thursday's close, levels not seen since May, LSEG data showed.
June Goh, a senior analyst at Sparta Commodities, said an uptick in freight rates for Very Large Crude Carriers on the Middle East to China route has also increased costs for Gulf crudes versus arbitrage supplies from Kazakhstan, the U.S. and Brazil.
"We anticipate further correction of the spot AG (Arabian Gulf) market is required to stave off competition of the arb crudes," she added.
Meanwhile, traders are also seeking opportunities to ship U.S. West Texas Intermediate crude to Asia after premiums for WTI at East Houston , also known as MEH, fell to their lowest in more than two weeks.
Offers for WTI crude deliveries to North Asia are about $5 a barrel above September Dubai quotes, slightly higher than Murban, traders said.
(Reporting by Florence Tan and Siyi Liu in Singapore, Arathy Somasekhar in Houston; Editing by Sharon Singleton)
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