|13 February, 2020

Middle East seeks buyers for spare crude as China cuts back-sources

OPEC pondering further supply cut

A crude oil tanker is docked at Isla Oil Refinery PDVSA terminal in Willemstad on the island of Curacao, February 22, 2019. Image used for illustrative purposes.

A crude oil tanker is docked at Isla Oil Refinery PDVSA terminal in Willemstad on the island of Curacao, February 22, 2019. Image used for illustrative purposes.

REUTERS/Henry Romero

SINGAPORE- Some Middle East crude oil producers have asked Asian buyers if they could take more crude under their term supply contracts, as Chinese refiners cut purchases due to the coronavirus outbreak, sources close to the matter told Reuters on Thursday.

Iraq's Oil Marketing Co (SOMO) and Kuwait Petroleum Corp (KPC) have asked buyers if they have room for more crude cargoes loading in March, five sources said on condition of anonymity.

UAE's Abu Dhabi National Oil Company (ADNOC) has also made similar enquiries for April cargoes, one of the sources said.

SOMO, KPC and ADNOC did not immediately respond to requests seeking comment.

The move coincides with efforts by members of the Organization of the Petroleum Exporting Countries (OPEC) to reduce oil supply after China refineries have cut 1.5 million barrels per day (bpd) of crude throughput in February.

A technical committee has advised OPEC and its allies to cut production by another 600,000 bpd until the end of the second quarter. 

Chinese buyers' overall nominations for March-loading crude cargoes, which also included Saudi Arabian crude, were lower, even after the Middle East producers cut their March official selling prices (OSPs).  

"The Chinese are lifting as little as they could," said one of the sources.

More than 1,350 people have died from the coronavirus, which has disrupted China's economy and shaken Asian markets. 

Excess supplies have depressed global oil prices and spot prices for Middle East crude cargoes loading in April, which trade this month.

The April trading cycle kicked off this week with Middle East sour crude changing hands at deep discounts to their OSPs, or the prices for term supplies.

Gunvor bought an April-loading cargo of Das Blend crude at 90 cents below its OSP from Mitsui and a cargo of Murban crude at 65 cents a barrel below its OSP from BP

(Reporting By Shu Zhang and Florence Tan in Singapore; Additional Reporting By Rania El Gamal in Dubai; Editing by Barbara Lewis) ((shu.zhang@thomsonreuters.com; +65-6870-3549; Reuters Messaging: Twitter @shuzhang4))

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