Global energy crisis leads Asia to turn to US crude

Asian demand for Petroleum The US is rising as the energy crisis raises the prices of other crude that are traded against the global Brent futures contract.

China and other Asian buyers have been buying US acid crude supertankers for November delivery and are looking for more in December, according to traders. Most buyers are looking for US grades that have recently fallen to the lowest levels in more than a year, with an added incentive after the Chinese government granted millions of tons of oil import quotas.

A wide spread between Brent oil futures and West Texas Intermediate would allow US crude exports to increase, said Elisabeth Murphy, upstream analyst at ESAI Energy LLC for North America. WTI has been trading at least $ 3 a barrel below Brent since August, a discount that generally favors US crude exports.

The greatest appetite of Asia for US crude comes after a widespread recovery in freight and fuel transport activity, and on the eve of a winter in which demand for oil from the energy sector is likely to rise. This also occurs in a context of a global supply deficit for fossil fuels that is driving higher prices.

On Friday, Brent crude surpassed US $ 85 a barrel after months of production cuts by the OPEC and its allies in response to the pandemic. Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman reiterated this week the need for OPEC and its allies to take a gradual and phased approach to restoring production.

ESAI’s Murphy forecasts additional crude demand of around 700,000 barrels a day in Europe and Asia combined this winter, due to the switch from natural gas to oil. With the help of a wide WTI discount to Brent, US crude exports should reach 3.1 to 3.2 million barrels a day this month, up from 2.6 million last month, he said.

As the United States will also enter winter soon, increased demand abroad will mean increased competition for US refineries. Hurricane Ida has already caused a loss of 30 million barrels in local supply, and some of the production will not recover until next year.