China goes on Oil-Buying Spree Once Again
Published By : 14 Apr 2015 | Published By : QYRESEARCH
Recent events have shown that yet again, China is off on an oil buying spree. According to traders based in Singapore, in April alone, China National United Oil Corp., or state-run China National Petroleum Corp.’s trading unit bought a total of 19 tankerloads of oil ( this is equal to 9.5 million barrels of oil), which will be delivered in June or July. This is the largest buying binge by Chinaoil on the spot market since October. Chinaoil bought 23.5 million barrels, or 47 cargoes, that month, which is a monthly record for the East Asian country.
With more than half of the month still left, it is possible for Chinaoil to surpass the total purchase of October if it continues to buy oil aggressively. A comment was sought late on Tuesday, to which China National Petroleum did not immediately respond.
The purchases made by Chinaoil are through what traders are calling the “e-window”. This mechanism is operated by Platts, which is a commodities price-reporting firm and a part of McGraw Hill Financial Inc.
Through the e-window system, traders put in their bid and offer prices for Dubai crude oil, and oil of similar grades that are produced in the Upper Zakum field of the United Arab Emirates and in Oman. This is broken down into lots of 25,000 barrels each and is called partials.
Typically, the trading of oil on the spot market is done in private. However, participating in the e-window by Platts makes the prices public. The prices at which transactions are made and completed are used to create market benchmarks which are published by the pricing firm. Prices of Oman, Dubai, and Upper Zakum crude oil jointly comprise an oil price indicator in Asia.