LONDON: Chinese loadings of West African crude oil fell back from 19-month highs in May as delivery delays, port congestion and full tanks scuppered interest from private oil refineries, according to a Reuters survey of shipping fixtures and traders on Tuesday.
China's bookings of West African crude fell to 981,000 barrels per day (bpd) for May loading, down from a 19-month high in April of 1.14 million bpd. Traders had warned for weeks that logistical bottlenecks and port congestion at Qingdao would make it difficult for the frenzied purchases from so-called teapot refiners to continue.
An increase in India's purchases, to a four-month high of roughly 613,000 bpd helped to offset the decline. But overall bookings still slipped to 1.81 million bpd, their lowest level since January.
Weaker demand from the independent, or teapot, refineries in China, the world's largest energy consumer, is a red flag not just for West African oil producers, but for the broader market. These private refiners were granted licenses to import crude only last year, and their keen buying was a key source of support for the roughly 70 percent rally in oil benchmarks since the beginning of the year.
In an interview with Reuters, a senior official from China's biggest private refiner warned that port congestion and logistical issues would cut into the teapot buying.
Reliance, a private Indian refiner, booked several cargoes, including Angola's Pazflor, Cabinda and Dalia, Gabon's Olowi and a cargo of Cameroonian crude. This, along with tenders from state-run Indian Oil Corp., helped boost the country's purchases.
But Reliance processes a diverse mix of crude, and is constantly looking to maximise revenue by buying the most cost effective grades, making it a fickle buyer. It is also looking to increase purchases from Iran, which could dent its other bookings.
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