Tentative contracts for export of US crude oil from the Gulf Coast cast a glimmer of hope that global oil demand is starting to recover after being hit by the coronavirus pandemic.
According to Refinitiv Eikon and shipping sources, this past week BP, Trafigura, and Equinor have tentatively ordered vessels to ship US crude to destinations globally over the next few months.
One shipbroker said that commodities merchant Trafigura and Occidental Petroleum are between others in looking to book vessels from the US Gulf Coast to Asia.
Another shipping source informed that the US Gulf export market was mainly active last week with roughly six vessels confirmed with loading dates in June.
In April, US crude exports plunged as global demand nosedived by 30%. Last week, exports edged down to the lowest level in a month at 3.2 million bpd, according to the US Energy Information Administration (EIA).
This month, supertankers freight rates slumped by more than 80% when US crude’s discount to Brent is still narrow. It was the lowest level since August 2019. Currently, the rates are around USD5.75 million after peaking at about USD20 million late in March, according to sources.
Eventually, the low freight rates prompted interest in exports to soar, moreover when China and India are expected to show recovery in demand as the coronavirus lockdowns eased.
Some traders said that Taiwanese refiner CPC Corp. bought 6 million barrels of US WTI Midland crude for delivery in August.
Going forward, the market is anxious about the heightening tensions between the US and China, as the geopolitical issue in Hong Kong could prompt the US to slap new trade sanctions on China.
