After Opec cuts heavy oil, China teapot refiners pull US supply to Asia

Refiners value heavy crude from the US because its lower cost results in higher margins

SINGAPORE, HOUSTON: Chinese independent, or "teapot", refiners are bringing in rare cargoes of North American heavy crude in a new long-distance flow that traders say has only been made possible by Opec's output cuts — and ample supplies in Canada and the United States.

In April, at least 1 million barrels of the heavy crude Mars, pumped from the US Gulf of Mexico, are expected to land in China's Shandong province and 1 million barrels of a second unidentified heavy-grade will arrive in China, trade and shipping sources said last week.

This follows the arrival in January of 600,000 barrels of US Gulf Blend, a heavy crude made up of a blend of various US and Canadian grades loaded onto ships on the US Gulf Coast, according to the sources and shipping data.

Heavy crude is typically more dense and viscous than other oil grades. Refiners with facilities that can process these grades value heavy crude because its lower cost results in higher margins from producing fuels from these grades.

The Organization of the Petroleum Exporting Countries' (OPEC) output cuts have targeted heavy crude, with linchpin producer Saudi Arabia and Venezuela reducing...Read more...