News Desk

China crude demand up

SINGAPORE

Chinese independent oil refiners are snapping up crude cargoes from Russia, Oman, Africa and Brazil for delivery in September-October as they ramp up operations after refining margins turned positive in July, trade and refining sources said.

Strong buying interest from the refiners, also known as "teapots", drove up spot premiums for grades such as Russian ESPO, Oman, Brazil’s Lula and Angolan crude, that they typically purchase, two Singapore-based oil traders told Reuters.

At least two Chinese refiners are increasing the volume of crude they process at plants to capitalise on higher fuel prices, company executives said.

These refiners were forced to cut production in the first six months on losses after new big refineries added to a domestic fuel supply glut.

"From January to June we were all making losses. This month, thanks to a price increase in refined products, our lives get better," said a procurement source who buys Russian crude for a Shandong-based refinery.

The source said the refinery bought two cargoes, or 200,000 tonnes, of Russia ESPO, this month and is running its plants at 90 per cent.

The refiners were encouraged by higher gasoline and diesel prices partly due to Beijing’s push for infrastructure investments, the refining sources said.

Teapots are also stockpiling crude after receiving the government’s second batch of import quotas earlier this month.




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