Middle East crude benchmarks Oman and Dubai firmed on Wednesday after Rongsheng Petrochemical snapped up spot cargoes for delivery in December and January in preparation of starting a new crude unit by the end of the year.
Rongsheng, the trading arm of Chinese private refiner Zhejiang Petrochemical, bought at least 3.5 million barrels of Upper Zakum crude from the United Arab Emirates and 1.5 million barrels of al-Shaheen crude from Qatar via a tender that closed on Tuesday, the sources said.
The cargoes were likely sold at premiums of more than 50 cents a barrel to Dubai quotes on a delivered basis, one of the sources said.
On Wednesday, Rongsheng was said to have bought another 2 million barrels of Oman crude from Occidental, trade sources said. It may have also purchased 1 million barrels each of Basra Light and Upper Zakum crude from PetroChina, they added. These deals could not be verified.
Rongsheng’s purchase helped absorbed some of the unsold supplies from last month as the company did not purchase any spot crude in past two months, the sources said.
Separately, PV Oil has closed the first round of bids for supplies of several crude grades in the first half of next year.
Viva Energy Group Ltd said it expected its refinery business to make a loss in the third quarter and that it would make a decision on its future in December as the longer-term outlook remains highly uncertain.
Global oil stocks which rose during the height of the pandemic are being steadily reduced, the International Energy Agency said, but a second wave is slowing demand and will complicate efforts by producers to balance the market.
Russian Energy Minister Alexander Novak said the OPEC+ group of leading oil producers will start easing output curbs as planned despite a global spike in coronavirus cases.
U.S. shale oil output is expected to decline by 123,000 barrels per day (bpd) in November, the biggest drop since May, to about 7.69 million bpd, the U.S. Energy Information Administration (EIA) said in a monthly forecast on Tuesday.
Source: Reuters (Reporting by Florence Tan; Editing by Krishna Chandra Eluri)