RIYADH: Oil prices hovered near two-month lows on Monday as supply fears receded while concerns over China’s fuel demand and rising interest rates weighed on prices.
Brent crude futures for January had slipped 90 cents, or 1.03 percent, to $86.72 a barrel by 07.45 a.m. Saudi time after settling at its lowest since Sept. 27.
US West Texas Intermediate crude futures were at $79.22 a barrel, down 86 cents or 1.07 percent.
Both benchmarks closed Friday at their lowest since Sept. 27, extending losses for a second week, with Brent down 9 percent and WTI 10 percent lower.
Russian October oil supplies to China up 16 percent
China’s oil imports from Russia jumped 16 percent in October from the same month last year to just behind top supplier Saudi Arabia, as state-run firms stocked up before a European embargo over Russia’s invasion of Ukraine kicked in.
Supplies from Russia, including oil pumped through the East Siberia Pacific Ocean pipeline and seaborne shipments from Russia’s European and Far Eastern ports, totaled 7.72 million tons, data from the Chinese General Administration of Customs showed on Sunday.
That amount, equivalent to 1.82 million barrels per day, was steady from September but off May’s record of nearly 2 million bpd.
State-run traders including Unipec, Zhenhua Oil and Chinaoil ramped up imports of Russian Urals, loaded mostly from European ports, before winding down purchases in recent weeks in the face of imminent EU sanctions and uncertainty surrounding a Group of Seven plan to cap Russian oil prices.
Saudi shipments rose 12 percent from a year earlier to 7.93 million tons, or 1.87 million bpd, versus September’s 1.83 million bpd.
Year-to-date, Saudi Arabia remained China’s top supplier with volumes of 73.76 million tons, similar to the same period last year. January-October Russian supplies rose 9.5 percent on year to 71.97 million tons, helped by refiners’ consistent appetite for the discounted oil.
Europe rushes to fill up on Russian diesel before ban begins
European traders are rushing to fill tanks in the region with Russian diesel before an EU ban begins in February, as alternative sources remain limited, Reuters reported.
The EU will ban Russian oil product imports, on which it relies heavily for its diesel, by Feb. 5. That will follow a ban on Russian crude taking effect in December.
Russian diesel loadings destined for the Amsterdam-Rotterdam-Antwerp storage region rose to 215,000 bpd from Nov. 1 to Nov. 12, up by 126 percent from October, Pamela Munger, senior market analyst at energy analytics firm Vortexa, said.
With few immediate cost-effective alternatives, diesel from Russia has made up 44 percent of Europe’s total imports of road fuel so far in November, compared with 39 percent in October, Refinitiv data shows.
Although Europe’s reliance on Russian fuel has fallen from more than 50 percent before Moscow’s February invasion of Ukraine, Russia is still the continent’s largest diesel supplier.
“The EU will have to secure around 500-600 kb/d of diesel to replace the Russian volumes, replacements will come from the US as well as east of Suez, primarily the Middle East and India,” Eugene Lindell, refining and products market analyst at FGE, said.