December 17, 2003	Wednesday	Shawwal 22, 1424

LONDON, Dec 16: Asian buying of West African crude has stayed healthy at around 1.2 million barrels per day for January-loading cargoes, though it has dipped from near record levels of shipment East for December barrels, traders said.

Most predicted strong Asian buying, which has helped to sustain high oil prices, would continue into next year, though crippling freight rates could continue to subdue US buying interest.

The arbitrage for shipment West has been closed since the end of September. Although the Brent/WTI spread has widened to nearly $3, economics have been ruined as freight costs hover around 10-month highs.

Economics for shipment to Asia have been relatively favourable as differentials for West African crudes have been cheap compared with regional Asian grades.

January buying at around 1.2 million bpd compares with the 1.4 million bpd of December crude bought by Asia, which was close to an all-time high and slightly more than the roughly 1.3 million barrels shipped East in November.

Sales to the United States of West African cargoes for January-loading remained sluggish for a third straight month.

Traders said that so far only around 600,000 barrels per day of January crude had moved West as demand stayed weak.

The West’s energy watchdog, the International Energy Agency has said Chinese demand has risen by nearly 10 per cent this year. It has forecast Chinese oil demand will increase by a further 320,000 bpd, or 5.9 per cent next year, although it has also advised that China’s rapid expansion could start to burn itself out as high demand drives up energy costs which then threaten economic growth.

The other major importer of West African crude, the United States, will probably eventually receive much of the large amount of West African crude still on offer for January loading, though differentials achieved could be low.

Even though buying was unenthusiastic for December cargoes, traders estimate that 1.4 million bpd — close to the average of around 1.5 million bpd — eventually made their way to the United States, which tends to be the buyer of last resort.—Reuters