2020-11-18 14:20:00
U.S., S. KOREA OIL IMPORTS DOWN
PLATTS - 17 Nov 2020 - South Korea's crude oil imports from the US in October fell for the sixth consecutive month, while local refiners continued to favor Middle Eastern crude, lifting October Saudi oil shipments by more than 30% from a year earlier, preliminary customs data showed on Nov. 16.
South Korean refiners imported 1.192 million mt, or 8.74 million barrels of US crude in October, down 37% from 13.88 million barrels received in the same month last year, customs data showed.
Over January-October, US crude imports fell to 92.91 million barrels, down 17.5% from the same period last year.
On the contrary, South Korea's crude imports from its top supplier Saudi Arabia in October rose 32.6% year on year to 4.08 million mt, or 29.91 million barrels, driven by lower official selling prices by Saudi Aramco.
Local refiners continue to find their staple high sulfur Middle Eastern crude to be the most viable and economical feedstock option in times of volatile refining margins and tepid consumer fuel demand, according to refinery officials and feedstock trading managers based in Seoul.
The majority of US crude that South Korean refiners purchase tends to consist of WTI and Eagle Ford, but companies have been reluctant to buy high volumes of the light and middle distillate-rich refinery feedstock due to dismal domestic demand for gasoline, jet fuel and diesel.
The country's jet fuel consumption is expected at around 4.1 million barrels in the fourth quarter, down 60% from the same period a year earlier, according to South Korean middle distillate marketing managers surveyed by S&P Global Platts.
Diesel consumption fell 3% year on year to 40.3 million barrels in Q3 and demand for the fuel is expected to fall to 39 million barrels in Q4, down 13% from a year earlier, the survey showed.
WTI no longer cheap
South Korean refiners have sharply increased intakes of Middle East crude since May as they started to reduce imports of US grades due to expensive WTI compared with Dubai-linked Persian Gulf grades.
South Korean refiners have paid an average outright price of $43.82/b for Saudi crude imported so far this year, sharply lower than $53.91/b paid for shipments from the US, according to latest data from state-run Korea National Oil Corp.
Despite US grades' higher quality over Middle Eastern sour crude, WTI used to trade at a discount to Dubai not so long ago, trading managers at SK Innovation and Hyundai Oilbank said.
In 2019, South Korea paid on average $65.17/b for crude shipments from the US, cheaper than an average of $66.87/b paid for Saudi crude cargoes received in the year.
Stockpiles
In total, Asia's fourth biggest energy consumer imported 11.087 million mt, or 81.27 million barrels (2.62 million b/d) of crude oil in October, down 1.3% from 82.33 million barrels a year earlier, customs data showed.
In the first 10 months of this year, the country's crude imports dipped 7.2% year on year to 825.4 million barrels.
South Korea's crude stockpiles decreased 11.3% year on year to 44.92 million barrels as of the end of September, according to KNOC data.
Final oil data for October will be released later this month by KNOC.
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