RIL buys 3 mn barrels spot Brazil crude

Reliance Industries (RIL), operator of the world’s largest refining complex, bought around 3 million barrels of spot Brazilian crude to arrive in India in the next two months, industry sources said on Friday.

The move was made possible by weaker US crude prices versus European benchmark and lower freight rates, traders said.RIL bought from Petrobras a Very Large Crude Carrier (VLCC) of Roncador Heavy and Albacora crudes to be loaded this month and a Suezmax of October-loading Marlin, a trade source said.
Petrobras has provisionally booked VLCC Olivia to load crude in Brazil on September 28 and head for the Indian west coast at a freight rate of W47.5, a shipping fixture from brokerage Clarksons showed.

RIL has also booked VLCC Vega Star to load crude in the Caribbean on September 30 at a freight rate of $2.7 million.

US crude futures have fallen below ICE Brent with the front month differential between the two grades at its widest level since late May, making South American crudes more affordable to Asian refiners.

Crude oil freight rates on major routes were also mostly lower this week due to growing vessel availability.

More Brazilian crudes are flowing into Asia as Chinese and Indian refiners diversify their crude supplies.

RIL’s purchase of Brazilian crudes jumped to 43,060 barrels per day (bpd) last year, up from 2,760 bpd in 2008.

The company operates two refineries with a total capacity of 1.24 million bpd in Jamnagar.

RIL last bought in April a VLCC of Brazilian crudes from Petrobras for June delivery, the source said.

Rising supplies from Canada and the Bakken oil shale may continue to put downward pressure on the front month spread until “the peak in refinery maintenance passes in six to eight weeks’ time”, JPMorgan analysts said in a September 1 note.

“We retain a cautious view on the WTI-Brent differential in light of the structural supply pressures that we see building at the Cushing delivery point,” the analysts said.

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