Saudi crude oil supply to China to fall 5.8m bbls in June from May
Chinese refiners will lift less Saudi crude oil in June than May, people with knowledge of the matter said.
The supply cuts come after the world’s top exporter Saudi Aramco hiked official selling prices for most of its crude to Asia to the highest in five months despite weak refining margins.
The volume of Saudi crude to be loaded for China is estimated to fall by 5.8 million barrels in June from 45 million barrels in May, the sources said. Chinese refiners are lifting less Saudi crude because of the high OSPs as well as weak margins, two of the sources said.
Three other Northeast Asian refiners will receive full contractual supplies in June.
Aramco did not immediately respond to requests for comment outside of its office hours.
Oil futures rose on Monday after Saudi Arabia hiked June crude prices for most regions and as the prospect of a quick agreement for a Gaza ceasefire deal appeared slim, reviving fears that combat between Hamas and Israeli forces will resume soon.
Brent crude futures were up 69 cents, or 0.84%, at $83.65 a barrel at 11:15 CDT (1615 GMT), while US West Texas Intermediate crude futures were at $78.89 a barrel, up 78 cents, or 1%.
Last week, both futures contracts posted their steepest weekly loss in three months, with Brent falling more than 7% and WTI down 6.8%, as investors weighed weak US jobs data and the possible timing of a Federal Reserve interest rate cut.
Prospects for a Gaza ceasefire faded as Hamas reiterated its demand for an end to the war in exchange for the freeing of hostages and Israel appeared poised to launch a longthreatened assault in the southern Gaza Strip. On Monday,
Israel’s military called on Palestinian civilians to evacuate Rafah as part of a “limited-scope” operation.
“Markets are a little jaded about geopolitical risk from the war,” said John Kilduff, partner with Again Capital. “I think you’re going to have to see more kinetic activity to move the markets,” News that talks were continuing between Hamas and Israel despite failure to reach agreement over the weekend, also tempered market reactions on Monday, Kilduff said.
Also supporting oil was Saudi Arabia’s move to raise the official selling prices for its crude sold to Asia, Northwest Europe and the Mediterranean in June, signalling expectations of strong demand this summer.
In China, the world’s largest crude importer, services activity remained in expansionary territory for the 16th straight month, while growth in new orders accelerated and business sentiment rose solidly, boosting hopes of a sustained economic recovery.
Asia’s naphtha refining profit margin tanked to the lowest since Nov. 11 on Monday after crude oil benchmarks rose, while slow petrochemical demand continued to weigh on market sentiment, traders said.
The crack plunged to $2.75 a tonne over Brent crude oil from $14.32 a tonne in the earlier session.
In physical markets, energy traders Trafigura and Sietco bought 25,000 tonnes each of naphtha for second-half July and first-half August loading, market participants said.
Unipec bought 100,000 barrels of benchmark-grade of gasoline for late-June loading. The gasoline crack rose by 79 cents to $11.30 a barrel over Brent crude on Monday.
Ports in China’s Shandong province are demanding more detailed information about oil tankers that are more than 15 years old that call at their terminals, sources with knowledge of the matter said, potentially delaying the unloading of crude shipments in the world’s biggest oil importer.