SINGAPORE: The US is set to get a bit more possessive about its own oil, sparking a bidding war with eager buyers on the other side of the world.
Asian refiners from China to Taiwan and Thailand have boosted purchases of American crude in recent months because it was increasingly turning cheap relative to supplies from other parts of the globe. They’re now about to face stiffer competition as the US’ own demand rebounds, with domestic refineries restarting after spring maintenance, according to industry consultant Energy Aspects Ltd.
“There will be a tug of war between US domestic demand and international markets,” said Virendra Chauhan, a Singapore-based analyst at Energy Aspects. “That’ll determine how much American crude will flow to Asia in the coming months.”
While more than 1 million barrels a day of refining capacity in the US was offline during May, only less than 200,000 barrels a day will be affected over the following three months as plants pump out fuel to meet demand during the summer driving season, according to the consultant.
Crude volumes going into American refineries have also risen in recent weeks, data compiled from the Department of Energy show.
Higher intake by domestic plants will contribute to limiting the availability of cargoes for export even as pipeline bottlenecks pose hurdles for transporting all of the oil pumped inland to US Gulf Coast terminals – an infrastructure headache that Citigroup Inc and Energy Aspects see lasting until at least mid-2019.
That means, in the coming months, the likes of Taiwan’s CPC Corp and China’s Unipec are unlikely to enjoy the price advantages that had spurred them to buy millions of barrels of US crude recently, according to Chauhan. CPC joined Unipec – the trading unit of China’s state refining giant Sinopec – as one of Asia’s top buyers of US crude last month after it purchased as much as seven million barrels of WTI Midland for loading in July. — Bloomberg
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