New York/New Delhi: State-run Bharat Petroleum Corp Ltd US is pushing up on rising volumes of crude, people familiar with the matter said, as fuel demand improves in the Asian country and weak US crude prices make buying attractive.
Fuel demand in India rose in July to its highest level since April as pandemic restrictions and lockdown conditions in most states were not good. The country is the world’s third largest crude oil importer and consumer.
US crude oil prices have become more attractive to Asian buyers as the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia halt production.
Two sources with knowledge of the matter said that BPCL, the second largest state-run refiner in India, has so far procured around 9 million barrels of US crude for delivery in August, September and October.
He said US crude bought between January and July is more than India’s 17 million barrels. Asian countries, including China and South Korea, have also intensified purchases of cheaper US crude barrels this month.
India is buying mostly WTI Midland – the lighter, sweeter crude grade produced in the Permian Basin, the top US shale region, due to attractive prices. Prices of WTI Midland, one of the most popular export grades, were trading near their weakest levels in a year in early August. India has also procured some West Texas Light (WTL) grade crude.
Traders said another state-run refiner, Indian Oil Corp, is also seeking barrels but is less active in the United States and has so far focused more on the West African crude market. A source familiar with the matter said that since April, IOC has been buying American oil under a spot deal.
The kingdom’s refiners cut purchases from top exporter Saudi Arabia earlier this year as ties between New Delhi and Riyadh soured due to rising oil prices.
However, refiners resumed normal procurement in June as Saudi Arabia and other Middle Eastern countries supplied liquid medical oxygen and medical aid to help India tackle the second wave of the coronavirus.
US crude exports have declined in recent weeks due to spotty fuel demand around the world. According to the US Energy Information Administration, the four-week average of total US crude exports fell to just 2.4 million barrels per day (bpd) in the week to August 6, the lowest since February 2019. Analysts, however, believe that US exports will continue to grow.
“We are positive that US crude oil trends in Asia should continue in the coming weeks,” JBC Energy said in a note.
A source familiar with the matter said commodity merchant Vitol sold one million barrels of US crude to BPCL for October. Vitol, BPCL and IOC declined to comment.
US oil production has slowly returned from its nadir during the first outbreak of the coronavirus pandemic. As of May, the last monthly figures were available, the EIA showed US production at 11.2 million bpd, up from 9.7 million bpd a year earlier.
Fuel demand in India rose in July to its highest level since April as pandemic restrictions and lockdown conditions in most states were not good. The country is the world’s third largest crude oil importer and consumer.
US crude oil prices have become more attractive to Asian buyers as the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia halt production.
Two sources with knowledge of the matter said that BPCL, the second largest state-run refiner in India, has so far procured around 9 million barrels of US crude for delivery in August, September and October.
He said US crude bought between January and July is more than India’s 17 million barrels. Asian countries, including China and South Korea, have also intensified purchases of cheaper US crude barrels this month.
India is buying mostly WTI Midland – the lighter, sweeter crude grade produced in the Permian Basin, the top US shale region, due to attractive prices. Prices of WTI Midland, one of the most popular export grades, were trading near their weakest levels in a year in early August. India has also procured some West Texas Light (WTL) grade crude.
Traders said another state-run refiner, Indian Oil Corp, is also seeking barrels but is less active in the United States and has so far focused more on the West African crude market. A source familiar with the matter said that since April, IOC has been buying American oil under a spot deal.
The kingdom’s refiners cut purchases from top exporter Saudi Arabia earlier this year as ties between New Delhi and Riyadh soured due to rising oil prices.
However, refiners resumed normal procurement in June as Saudi Arabia and other Middle Eastern countries supplied liquid medical oxygen and medical aid to help India tackle the second wave of the coronavirus.
US crude exports have declined in recent weeks due to spotty fuel demand around the world. According to the US Energy Information Administration, the four-week average of total US crude exports fell to just 2.4 million barrels per day (bpd) in the week to August 6, the lowest since February 2019. Analysts, however, believe that US exports will continue to grow.
“We are positive that US crude oil trends in Asia should continue in the coming weeks,” JBC Energy said in a note.
A source familiar with the matter said commodity merchant Vitol sold one million barrels of US crude to BPCL for October. Vitol, BPCL and IOC declined to comment.
US oil production has slowly returned from its nadir during the first outbreak of the coronavirus pandemic. As of May, the last monthly figures were available, the EIA showed US production at 11.2 million bpd, up from 9.7 million bpd a year earlier.
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