Asian demand for US oil is rising as the energy crisis boosts prices for other crudes that are priced against the global Brent futures contract.
China and other Asian buyers have been snapping up supertankers of US oil for delivery next month and seeking more for December, some traders have said.
Most buyers are seeking US grades that had recently slumped to the lowest levels in more than a year, with an added incentive after Beijing awarded millions of tonnes of crude oil import quotas.
A wide spread between Brent and West Texas Intermediate (WTI) oil futures is accommodating higher US crude exports, said Elisabeth Murphy, ESAI Energy LLC upstream analyst for North America.
WTI has been trading at least US$3 a barrel under Brent since August, a discount that generally favors US crude exports.
Asia’s increased appetite for US crude comes after a widespread recovery in road-fuel and freight activity, and ahead of a winter that is likely to see more oil demand from the power sector.
This is also happening against a global supply deficit in fossil fuels that is driving higher prices.
Earlier, Brent crude surpassed US$85 a barrel on Friday following months of production curtailments by OPEC and its allies in response to the COVID-19 pandemic.
Saudi Arabian Minister of Energy Prince Abdulaziz bin Salman has reiterated the need for OPEC and its allies to take a gradual, phased approach to restoring output.
With natural gas trading at close to US$200 in per-barrel terms in Europe, the consensus among analysts is that oil demand globally would be boosted by a further half a percentage point as companies rush to secure any fuel that can be used as a substitute, from diesel to fuel oil to crude.
Murphy expects about 700,000 barrels a day in additional crude oil demand from Europe and Asia combined this winter due to the switch from natural gas to oil.
With the help of a wide WTI discount to Brent, US crude exports this month should reach 3.1 million to 3.2 million barrels per day, up from about 2.6 million last month, she said.
With the US also entering its winter soon, the increase in overseas demand would mean more competition for US refineries. Hurricane Ida caused a 30 million barrel loss in local supply, with some production only set to return next year.