Energy News Today

SOUTH KOREA DATA: Nov crude imports rise but near-term throughput under pressure

Highlights

Spot crude purchases for Q1 expected to fall amid fragile demand

US crude imports rise year-on-year for 8th consecutive months

Refiners continue to find Middle Eastern crude prices expensive

South Korea’s crude oil imports in November rose 14.2% from a year earlier, as local refiners raised crude throughput to meet improved consumer fuel demand, but spot crude cargo purchases for Q1 2022 could slip if Seoul reimposes COVID-19 restrictions for a prolonged period of time, refining industry and trading participants said Dec. 21.

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The world’s fifth-biggest crude importer received 10.836 million mt, or 79.43 million barrels of crude oil last month, compared with 69.53 million barrels received a year earlier, according latest data from the Korea Customs Service.
The increased shipments reflect major refiners’ higher operation and run rates to meet improved consumer fuel demand following Seoul’s decision to shift to a phase of living with COVID-19 from Nov. 9.

Local refiners and condensate splitters processed 83.858 million barrels of crude in November, up 6.8% from a year earlier.
Apart from rising consumer demand, improved cracking margins and high prices of oil products, in line with strong international crude prices, have also provided an incentive to raise run rates and fuel production, an official at Korea Petroleum Association based in Seoul said.

Near-term demand risk

Looking ahead, however, South Korean refiners are considering cutting their throughput levels slightly and they were expected to reduce crude purchases from the spot market in the near term, as Seoul gradually unwinds some of its ‘living with COVID-19’ policies due to the resurgence in pandemic spread, according to plant operation managers at two major South Korean refiners.
South Korea’s daily infection cases surged to over 7,000 since early December, compared with under 2,000 in October, to reach a new all-time high of 7,850 on Dec 15, according to the Korean Disease Control and Prevention Agency.
Death toll jumped by 94 on Dec. 14, the biggest increase since the COVID-19 outbreak in January last year.
In the face of the worsening crisis, the government tightened social distancing rules and imposed mobility restrictions again, focused on the densely populated Seoul capital area, the KDCA said.
Major refiners and petrochemical makers including Hanwha Total, SK Innovation and Hyundai Oilbank indicated that their 2022 term crude supply deals with producers both within and outside the OPEC have been mostly completed, and the term supply requirements have been carefully analyzed prior to the negotiations.
With monthly term supply volumes fixed, the refiners noted that spot purchases, which typically make up around 20%-35% of their monthly feedstock procurement, would have to be cut down if consumer demand both domestically and abroad in export destinations falter sharply amid resurgence in COVID-19 spread.

Expensive Middle East, attractive US

The customs data showed South Korea’s intake of US crude jumped 66.5% year on year to 10.89 million barrels in November.
The latest shipments from North America marked the eighth consecutive month of year-on-year increase, largely driven by competitive prices US grades amid expensive Middle Eastern crude official selling prices.
A slew of major Middle Eastern sour crude producers increased their January OSPs for Asia-bound cargoes despite fears about the impact of the omicron variant on global oil demand.
Saudi Aramco boosted its Asia OSP for Arab Medium crude for loading in January by 70 cents/b from its December price to a $3.05/b premium to the monthly average of Oman/Dubai, while Iraq’s State Oil Marketing Organization set its January OSP for Basrah Medium crude at a premium of $1.40/b to Oman/Dubai, up $0.50/b from December.
“It was rather lucky we consider that the OPEC+ decided to continue raising supply by 400,000 b/d in January despite the renewed demand risk, but the OSPs are kept very high and non-OPEC supplies appear much more competitive these days,” said a sour crude trading manager at a major South Korean refiner.

South Korean refiners paid on average $69.26/b for Saudi crude shipments over January-October and $69.49 for Kuwaiti crude over the same period, according to latest data from state-run Korea National Oil Corp. In comparison, shipments from the US cost an average $68.39/b over the same period.
KNOC will release detailed oil trade data for November in the week of Dec. 26.

SOUTH KOREA’S CRUDE IMPORTS (Unit: ‘000 barrels)

Source: Korea Customs Service, Korea National Oil Corp.

Read More: SOUTH KOREA DATA: Nov crude imports rise but near-term throughput under pressure

2021-12-20 20:29:00

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