March 1, 2017 / 4:36 PM / 3 years ago

China loads up on West African oil in March, hitting fresh record

    * China's Unipec buys first cargo of Angola's Olombendo
    * Bookings to China surpass Feb. record
    * Overall loadings to Asia slip on weaker Indian buying
    * Graphic: tmsnrt.rs/2dG0SuJ

    By Libby George
    LONDON, March 1 (Reuters) - China's loadings of West African
crude oil are set to rise to a new record in March as the nation
stocks up on medium and heavy oil in the midst of OPEC
production cuts, according to a Reuters survey of shipping
fixtures and oil traders on Wednesday,
    Some 1.41 million barrels per day (bpd) of West African oil
are expected to load for China over the coming month, surpassing
February and hitting a fresh high since Reuters began tracking
the shipments in 2004. 
    China's state-run Unipec led the pack, along with Sinochem,
while the nation's independent refineries, known as "teapots",
joined in by taking cargoes from trading houses such as
Trafigura and Total. 
    The companies favoured Angola's medium and heavy oil
including Cabinda, Dalia, Nemba, Plutonio and Saturno, and will
also take the first cargo of Angola's newest oil grade,
Olombendo. 
    Chinese buyers also booked Congolese Djeno, Ghanaian Jubilee
and some cargoes of Nigerian oil, including Escravos and Qua
Iboe. 
    Their buying has pressed the differentials versus dated
Brent for Angola's crude to unusually high levels, but some
analysts warned that some cargoes could be headed for storage
rather than immediate consumption.     
    "With seasonal turnarounds, they probably won't be
processing it now - they cannot digest it," said Ehsan Ul-Haq,
principal consultant with KBC. 
    He added that the buyers were tempted in part because of a
still-narrow spread between Brent and Dubai crudes DUB-EFS-1M,
which makes West African grades more competitive in Asia, but
production cuts from the Organization of the Petroleum Exporting
Countries also led some to stock up.  
    OPEC's compliance with a pledge to cut 1.2 million bpd of
production this year rose to 94 percent last month, taking out
mostly medium and heavy crude grades.      
    "OPEC cuts are now biting, and Asia is feeling the pain. And
in Asia, the security of supply is important. They have always
been willing to pay a higher price for security of supply,"
Ul-Haq said.  
    Still, the keen Chinese buying was not enough to keep
overall West African flows to Asia supported, and the total
figure slipped to 2.1 million bpd in March, down from 2.31
million bpd in February. 
    Indian refineries booked just 14 cargoes to load in March,
down from 18 in February. Buyers in Indonesia, Taiwan, Thailand
and Malaysia also purchased smaller amounts of oil for March
loading.     
    
 COUNTRY     March        BPD '000s  February  BPD '000s
             cargoes                 cargoes   
 CHINA       46           1,409      40        1,357
 INDIA       14           429        18        611
 INDONESIA   4            123        3         102
 TAIWAN      3            92         2         68
 JAPAN       0            0          0         0
 S. KOREA    0            0          1         34
 OTHERS      2            61         4         136
 TOTAL       69           2,115      68        2,307
 
 (Editing by Susan Thomas)
  
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