By Eric Yep
SINGAPORE--China is on an oil-buying spree again.
China National United Oil Corp., the trading unit of state-run
China National Petroleum Corp. known as Chinaoil, has bought a
total of 19 physical oil cargoes for delivery in June or July so
far in April, Singapore-based traders said. That is equal to 9.5
million barrels of oil, and is Chinaoil's largest spot market
purchase since October last year when it bought a country record 47
cargoes, or 23.5 million barrels of oil.
With over half a month of trading still left, Chinaoil could
surpass its October volumes if it keeps up its current buying
pace.
Chinaoil's purchases were made through what traders call the
"e-window" operated by Platts, a commodities price reporting agency
and unit of McGraw Hill Financial Inc.
Through this mechanism, traders submit their bid and offer
prices for Dubai crude, and oil of similar grades like Oman and
Upper Zakum, broken into smaller lots of 25,000 barrels each,
called "partials."
The trading of physical oil cargoes on the spot market is
typically done in private, but participating in the Platts window
makes the prices public. The prices at which transactions are
completed in turn contribute to benchmarks published by the pricing
agency.
Chinaoil's record purchases in October last year contributed to
China's oil imports in December hitting a record of around 7.3
million barrels a day.
Analysts have suggested that large oil purchases by Chinese
trading firms are part of efforts to build the country's emergency
stockpiles during a time of low oil prices. However, traders say
stockpiling may not be the only motive for them to participate in a
public oil-trading mechanism like the one Platts operates.
National oil companies like those in China are increasingly
active in contributing to setting price levels rather than waiting
to see what pricing agencies publish, said Adi Imsirovic, general
manager at trader Clearsource Commodity Resources.
"That is what Chinaoil is doing now, and together with Shell and
Unipec, they have become a major player in the Platt's Dubai
market," he said. "Asian players...have become 'price makers'
rather than 'price takers'."
Write to Eric Yep at eric.yep@wsj.com
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