ASIAN refiners are importing the least West African crude in more than three years as plant maintenance combines with slowing economic growth to weaken demand.
Asian nations will cut oil imports from West Africa for October loading by 7% to 1.48 million barrels a day from the previous month, according to a Bloomberg survey of 10 traders and analysis of loading programmes. That’s 13% lower than a year earlier.
More than 1 million barrels a day of Asian refining capacity was scheduled to undergo maintenance in September and October, reducing demand for crude, said Ehsan Ul-Haq, a senior analyst at KBC Energy Economics. “This time of the year is usually maintenance season following the easing of summer demand for fuels.”
Weaker demand in Asia and a supply glut fuelled by U.S. and OPEC output has seen the price of crude decline by about half in the past 12 months.
While China, the world’s second-biggest oil user, is providing some support to the market by adding to its strategic crude reserves, Societe Generale SA said the country’s demand for oil products slowed in July and August from the preceding months.
India will import 9% less West African crude in October compared with the previous month and Taiwan will cut shipments by 62%, according to Bloomberg data.
While China is increasing purchases by 0.8 percent, there have been reports of some refiners in the country buying fewer cargoes of West African crude.
China’s demand for oil products averaged 485,000 barrels a day in July and August compared with 665,000 barrels a day in the three months ended June 30 and 500,000 in the first quarter, Societe Generale said in a Sept. 29 report.
“There have been some anecdotal market reports that warrant some caution regarding Chinese demand,” Michael Wittner, an analyst at Societe Generale, wrote in the report. “The key thing to watch for Chinese refinery runs and apparent product demand is whether the usual sequential increase takes place from September to December.”