(Repeats column with no changes to text. The opinions expressed
here are those of the author, a columnist for Reuters.)
By Clyde Russell
LAUNCESTON, Australia Feb 27 If you were
looking for evidence of reduced crude oil supply from OPEC and
its main ally in cutting output to boost prices, Russia, then
stay away from Asia's top importers.
January import data from China, India and Japan do little to
show the impact of reduced crude supply, but do suggest that
prices have risen in response to move by the producer group and
its allies to remove some 1.8 million barrels per day (bpd) from
global oil markets.
Top importer China's January data provides a case in point.
Imports rose 27.5 percent from the year-earlier month to
34.03 million tonnes, equivalent to 8.01 million bpd.
That's an impressive increase, believed mainly to be on the
back on ongoing additions to strategic reserves and rising
demand from smaller, private refiners that are now allowed to
Saudi Arabia - the main driver behind OPEC's decision in
November to cut output - increased exports to China by 18.9
percent to the equivalent of 1.18 million bpd in January from
the year earlier month.
This was also up a massive 40 percent from the 841,000 bpd
China imported from the kingdom in December.
The increase speaks more of a determined attempt by Saudi
Arabia to keep key customers in Asia well supplied, and cut
supplies to other buyers in other, less vital parts of the
However, there is another factor to consider: Chinese
customs data does tell us where each barrel of oil comes from,
but it doesn't tell us when that barrel was shipped.
It's possible that the surge of imports from Saudi Arabia in
January was partially related to barrels moving from floating or
other storage to delivery, as traders responded to the expected
tightening of the market and move of the oil futures curve from
contango toward backwardation.
Nonetheless, even if some of the barrels arriving are from
trade-related storage plays, it's still clear that China isn't
feeling its supplies being constrained by the countries
committed to cutting output.
Imports from Russia rose 36.5 percent in January from the
same month in 2016 to the equivalent of 1.08 million bpd, while
those from Angola surged 63.5 percent to 1.16 million bpd.
Other OPEC producers also saw their share of Chinese imports
grow by more than overall January imports, with Iraq up 43.2
percent and Venezuela by 80.1 percent.
The losers among major suppliers were Iran, with China's
imports dropping by 1.3 percent in January, and the United Arab
Emirates (UAE), whose exports to China declined by 15.5 percent.
VOLUMES TO ASIA UP, PRICES TOO
Turning to India, its imports from Saudi Arabia amounted to
925,700 bpd in January, up 36.1 percent from December and down
1.4 percent from the same month in 2016.
India also imported more in January than it did in December
from OPEC members Iran (up 1.5 percent), Iraq (up 2.1 percent)
and Angola (up 60.2 percent).
However, imports from the UAE were down 8 percent and from
Kuwait by 41.4 percent, although that country isn't a major
supplier to India.
In Japan, Asia's third-biggest oil importer, purchases from
top supplier Saudi Arabia fell to 1.3 million bpd in January
from December's 1.43 million, but were still 11.8 percent higher
than the same month last year.
Imports from Japan's number two supplier, the UAE, fell from
884,057 bpd in December to 752,973 bpd in January, while imports
from Russia rose to 214,498 bpd from December's 194,285.
It's also worth noting that Japan's total January imports
were 3.315 million bpd, some 349,000 bpd lower than December's
3.664 million bpd.
Overall, imports from Saudi Arabia in January by Asia's
three biggest oil purchasers rose to 3.41 million bpd from
2.947 million in December, a 15.2 percent jump.
The picture that emerges is Asia is largely unaffected by
OPEC and its allies' cuts to output - at least for now.
The main impact is being felt through higher prices, with
Chinese customs data showing that the cost of a barrel of Saudi
oil went up to the equivalent of $53.77 in January from $45.20
This was a far sharper increase that the overall cost of
China's oil, which rose to $52.20 a barrel in January from
It's pricing that may well end being the major driver of
change in Asia's oil markets, with buyers being tempted away
from cargoes from the OPEC and allied producers toward those
outside of the deal to limit output, such as the United States.
China imported 1.88 million of crude from the United States
in January, the equivalent of one Very Large Crude Carrier
(VLCC). For the whole of last year, it imported the equivalent
of two VLCCs from the United States.
If U.S. oil can compete price-wise with cargoes from the
Middle East, it may tempt Chinese refiners to buy more,
especially if the OPEC output cuts do drain stored oil and start
to crimp available prompt cargoes.
For OPEC and Russia, the question may eventually become
deciding whether they can continue to keep Asia well supplied
and maintain their relative market shares, while still
inflicting enough pain elsewhere to keep oil prices on a rising
(Editing by Kenneth Maxwell)