China, India boost physical crude oil prices as coronavirus punishes futures

China, India boost physical crude oil prices as coronavirus punishes futures

Robust demand from China and India has bolstered physical crude oil prices from around the world, traders said, in contrast to the futures market that is wrestling with over-supply and demand uncertainty wrought by COVID-19.
Global benchmark Brent futures are trading around $40 a barrel, having recovered from more than two-decade lows in April, but still under pressure from concerns a second wave of the pandemic will reduce fuel use.

On the more buoyant physical markets, China’s state and independent refiners are the keenest buyers as they fill early-2021 import quotas and as port congestion that has clogged traffic for much of the year has eased.

Their activity has helped to lift differentials in the last two weeks for Russian Urals, Norway’s Johan Sverdrup, Caspian Azeri BTC and CPC Blend, as well as West African and Brazilian grades.“China is again a hope for oil suppliers. Unlike Europe that is currently in the middle of the pandemic crisis, it seems to be the quickest to restore its economy,” a source in a global trading firm told Reuters on condition of anonymity.

Russian Urals achieved the highest premiums to dated Brent in three months and oil arbitrage shipments to China may increase soon, two traders said, especially for cargoes loading at the end of November and in December.

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