Open West African crude oil arbitrage attracts bigger variety of Eastern customers

Oriental buyers seldom seen in the West African crude market have been making an appearance recently amidst low values, a dropping Brent/Dubai spread, as well as a flat price at a 16-month reduced, trading resources stated Tuesday.

"Latin [American] qualities are weak. WAF crude has an overhang. North Sea is still readily available. Brent-related crudes will head to Asia [in this atmosphere]," an investor said.

With the arbitrage from West Africa to the east looking attractive, Taiwan's Formosa, Malaysia's Petronas and also Japan's TonenGeneral have actually become active players in the previous month, resources stated.

Angolan crudes, whose worths have actually plummeted to multi-year lows because August, are mainly being purchased.

TonenGeneral, with 3 refineries and an ability of 556,000 b/d, has bought two cargoes of Angola's Kissanje as well as a cargo each of Angola's Nemba and also Pazflor in the previous month, resources stated.

"Yes, they are fairly new to getting WAF. Yet formerly the refinery was owned by ExxonMobil, so sometimes cargoes went there I assume," a 2nd investor stated.

" [TonenGeneral] gotten Kissanje at the end of September and also in October they have actually purchased three cargoes [Kissanje, Nemba and also Pazflor] They are trying to move far from being reliant on Persian Gulf qualities," the investor claimed.

Formosa bought a cargo of Angola's Girassol for September loading, while Malaysia's Petronas bought a freight of Girassol for October.

Eastern demand, especially from Chinese refiners, for West African material had been restrained for July and August amid weak refining margins, high supplies, as well as weak product cracks.

chemicals used in water treatment grabbed for September and October, supported by lower VLCC products rates, the weak ICE Brent complex, and a minor improvement in refining margins, resources said.

"There is good assistance out there as differentials have actually been reduced enough to draw in a lot of purchasing passion. It appears that some purchasers are progressively coming back to getting WAF," a third trader claimed.

A narrower Brent/Dubai exchange of futures for swaps spread out has actually additionally made Brent-related crudes much more attractive to Eastern refiners, resources said.

The front-month EFS has actually traded in between $1.00-1.43/ barrel in the previous week, compared with levels as high as $3/b over a month ago.