July 2, 2012 / 3:34 PM / 7 years ago

W.Africa July oil flow to China seen at 2012 low

LONDON (Reuters) - China’s demand for West African crude oil for July is expected to fall to the lowest level this year following refinery run cuts there, a Reuters survey of traders showed on Monday, amid a sharp sell-off in benchmark Brent crude futures.

China, the world’s top energy consumer, has purchased about 29 cargoes, or 889,000 barrels per day (bpd) of crude oil, for loading in July from West African countries. Angola accounts for the bulk of the volume.

The volume is down about 12 percent from June and the lowest since December last year, according to Reuters data.

Total West African exports to Asia will fall to 1.5 million barrels per day, also the lowest since December, the survey showed.

Traders said Chinese companies resold some July cargoes, which they had bought earlier, on the spot market.

China’s top refiner, Sinopec Corp, will cut crude throughput by close to 236,000 barrels per day in July versus an earlier target, curbing production for a second straight month as inventories bulged and margins contracted, industry and trading sources said in June.

The cut would represent 5 percent of the 4.5 million bpd throughput target the refiner set in March for 2012. Taking into account a planned overhaul at the Sinopec Wuhan refinery, the reduction would total about 303,000 bpd.

Sinopec’s trading unit Unipec is the largest corporate buyer of Angolan crude.

China’s buying of West African crude is often used as an early, rough indicator of the country’s oil demand for the next 30 to 40 days.

“The fall is relatively significant. It could start putting more pressure” on Brent futures prices, a physical crude oil trader said.

International benchmark Brent futures on Friday posted their biggest quarterly fall since 2008. They extended the decline on Monday, down $2.06 on the day to $95.74 a barrel.

The purchases of other countries showed mixed trends for July.

Imports by India, the second largest Asian buyer of West African oil, were expected to total 12 cargoes for July loading, traders said. India buys mostly Nigerian and Angolan crude.

That cargo tally is steady from June, but July is a longer month than June, so the daily average will fall to 368,000 bpd from 380,000 bpd.

Taiwan increased its purchases to six cargoes, or about 184,000 bpd, for July from four cargoes in June as a narrower Brent-Dubai Exchange for Swaps (EFS) spread suggested a fall in the North Sea benchmark crude’s premium to the Middle East benchmark, making West African crude more affordable for Asian buyers.

Competition from a rise in exports from Libya to Nigerian sweet crude became visible in Indonesia’s purchase. It did not buy any West African for July but chose cheaper Libyan barrels.

Japanese imports of heavy-sweet West African crude for oil-fired power plants are seen at two cargoes for July loading. But some traders said the volume may increase later for July and August amid peak summer electricity demand and a lack of nuclear power generation capacity.

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