By Eric Yep
SINGAPORE--China is on an oil-buying spree again.
So far in April, China National United Oil Corp., or Chinaoil,
the trading unit of state-run China National Petroleum Corp., has
bought a total of 19 tankerloads of oil for delivery in June or
July, Singapore-based traders said. That is equal to 9.5 million
barrels of oil, and is Chinaoil's largest purchase on the spot
market since October, when it bought 47 cargoes, or 23.5 million
barrels, a monthly record for the country.
With more than half of April left, Chinaoil could surpass the
October total if it keeps buying aggressively.
Chinaoil's purchases were made through what traders call the
"e-window," a mechanism operated by Platts, a commodities
price-reporting company and unit of McGraw Hill Financial Inc.
Through this system, traders submit their bid and offer prices
for Dubai crude, and oil of similar grades produced in Oman and the
United Arab Emirates' Upper Zakum field, broken into lots of 25,000
barrels each, called "partials."
The trading of oil 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 are used to
produce market benchmarks published by the pricing company. Prices
of Dubai, Oman and Upper Zakum crude together comprise an indicator
for oil prices in Asia. That benchmark, named for Dubai crude, is
used by Middle Eastern oil producers and derivatives markets to set
prices.
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. Chinaoil's record
purchases in October contributed to China's oil imports in December
hitting a record of around 7.3 million barrels a day that
month.
Yet traders say stockpiling may not be the only motive for them
to participate in a public oil-trading mechanism like the one
Platts operates.
Oil pricing in the spot market has been dominated by major
international oil companies or large commodity-trading firms.
National oil companies, who buy most of the crude, have a huge
exposure to prices, but their involvement in setting price
benchmarks has been limited.
By taking a bigger role, they hope to reduce bias and increase
their influence.
"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," said Adi Imsirovic, general manager at Clearsource
Commodity Resources, a trading company. "Asian players...have
become 'price makers' rather than 'price takers'."
Like Chinaoil, Unipec is a state-owned Chinese oil company.
Write to Eric Yep at eric.yep@wsj.com
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