13 Aug 2022
Asian buyers are pivoting towards cheap US crude in a sign that demand for Middle Eastern oil is waning, Bloomberg reported.

South Korean and Indian oil refiners have so far snapped up around 16 million barrels of US crude on the physical spot market this month, which will largely be delivered in November, sources with knowledge of the matter told the outlet. This is double of the amount of oil purchased over the same period in July.

West Texas Intermediate oil, the main US export grade, are trading at a premium of less than $8 a barrel over the Dubai benchmark for crude due to arrive in November, including shipping and other costs, according to Bloomberg. The smaller the premium, the more attractive US crude will be to Asian buyers over Middle Eastern crude.

On the futures market, November WTI futures are trading at a premium of just $4 a barrel to Dubai futures and at a discount of nearly $4.50 a barrel to Murban futures - those backed by the UAE's flagship blend.

The shift in demand away from Middle Eastern to US crude suggests competition between producers in the two regions is heating up as the US, now the world's largest producer, undercuts the world's top oil exporting region.

The US has been pumping out more crude as the West scrambles to replace Russian supply after the invasion of Ukraine. In late July, US crude-oil exports hit a record high of 4.55 million barrels a day, according to data from the Energy Information Administration.

At the same time, Saudi Arabia raised its oil prices for Asian buyers for the month of August as a result of high demand and a tighter oil market in the face of economic sanctions.

But that demand appears to be cooling. Saudi Aramco has allocated full contract volumes of crude to at least 4 North Asian buyers for the last two months, suggesting that any squeeze on supply in the market could be easing as demand for its crude has not accelerated beyond what its buyers originally purchased, Reuters reported.

Rice output may drop by about 10 million tonnes in 2022-23

Rice output may drop by about 10 million tonnes in 2022-23 to 120 million tonnes because of a fall in the area the cereal is sown during the ongoing kharif season, estimate traders.

Paddy sowing in the current kharif season has been 13% less till August 5 due to rainfall deficiency in the staple grain’s main producer states.

Paddy acreage was 27.43 million hectare as on August 5, as against 31.41 million hectare a year earlier, according to data released by the agriculture ministry.

“The sowing season is over. If sowing is done now, the yield during the harvest will be dismal,” said agri research firm IGrain’s director, Rahul Chahuan.

West Bengal, which is the top producer of paddy, as well as Jharkhand, Bihar, Chhattisgarh, Uttar Pradesh, Madhya Pradesh, Odisha and Telangana have reported a fall in acreage.

While western Uttar Pradesh had a rainfall deficiency of 36% as on August 8, in eastern UP, rains were 43% below normal. Bihar and Jharkhand reported a rainfall deficiency of 38% and 45% respectively, while Gangetic West Bengal witnessed 46% less rains, according to data from the India Meteorological Department. ..

13 Aug 2022

Saudi Arabia eyes record-high premium for Asian oil customers despite crude's recent slump

Saudi Arabia is expected to charge its highest-ever premium for oil cargoes headed to Asia, even as traders see weakness in spot markets, according to a Bloomberg survey.

The world's top oil exporter and de facto leader of OPEC is planning a $10.80-per-barrel markup for its Arab Light crude over the regional benchmark price.

But a premium that high could hit demand for extra oil supplies as Asian refineries have seen narrower margins, traders told Bloomberg. Margins for gasoline in Asia have declined 70% from June while diesel fell 39%.

In addition, refiners in Asia have been running at full-capacity since Russia's invasion of Ukraine, and are considering scaling back operations starting in September, weighing further on demand.

Meanwhile, oil prices have slumped recently amid growing fears of a recession and global crude benchmarks are on pace for two months of consecutive losses, which hasn't happened since late 2020.

Saudi Arabia's expected markup for Asian crude also comes as Russia's war on Ukraine has shifted trade patterns.

Saudi Arabia and Iraq are helping Europe wean off of Russian crude, which is increasingly headed to Asia. Europe has imported more than 1 million barrels per day via the SuMed pipeline in the first three weeks of July, nearly double from a year ago, according to shipping data compiled by Bloomberg. The volumes in the pipeline, which transits through Egypt, are mostly Saudi oil but also include Iraqi crude.