GS Caltex, South Korea's second-largest refiner, said on Wednesday it will receive 1 million barrels of U.S. light crude oil in December, the second month in a row it has purchased crude from the United States, Reuters reported.
Changes in regional oil price benchmarks and low freight rates have opened up arbitrage opportunities for American and European crude to flow into Asia, displacing demand for similar quality Middle East grades such as Abu Dhabi's flagship Murban.
In its latest purchase, GS Caltex bought 1 million barrels of Eagle Ford crude, the company's spokesman said.
The company also bought 1 million barrels of Eagle Ford crude for November delivery, its first ever purchase of the grade. The arbitrage supplies are to meet higher demand for products such as heating oil, the GS Caltex spokesman said.
Both U.S. crude cargoes originated from commodity trading house Trafigura , trade sources said. Trafigura did not reply to an e-mail seeking comment.
South Korea last imported U.S. oil in March, data from the Korea National Oil Corp showed.
GS Caltex has also recently bought CPC Blend crude from Kazakhstan and North Sea Forties for delivery in December and January after Brent's premium to Dubai fell to the lowest in close to a year. "There was a lot of overhang in Europe which opened the arbitrage," a trade source said, adding that low freight and a widening of the Brent contango market structure helped.
In a contango market, oil becomes more expensive in future months, improving a cargo's economics when it travels over a longer distance.
Still, rising freight rates and West Texas Intermediate crude prices may soon close the arbitrage window for U.S. crude to Asia, traders said.
BP is planning to ship 1 million barrels of U.S. crude to Thailand and Australia for the first time, trade sources told Reuters at the end of October. (Reporting by Florence Tan in SINGAPORE and Jane Chung in SEOUL; Editing by Christian Schmollinger and Tom Hogue)
