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Though global oil prices remain subdued currently due to global growth worries, Middle Eastern oil is experiencing an extraordinary surge in prices. Asian refiners, particularly from China to Japan, are driving this increase in demand, resulting in a spike in trading activity.
The demand for Middle Eastern oil has jumped in recent weeks, with spot differentials for August-loading Oman crude and Abu Dhabi's Murban grade undergoing considerable price increases. Asian refiners, including China's Rongsheng Petrochemical, Taiwan's Formosa Petrochemical, and processors in Japan and Thailand, have been aggressively buying barrels from the region, per oil price.com, as quoted on Yahoo.
The post-COVID economic recovery in China has been a major tailwind. Unipec, a unit of China's leading refiner Sinopec, TotalEnergies SE, and Shell Plc have been involved in busy trading activities for Dubai crude partial contracts on the Platts trading window.
Approximately 40 Oman cargoes and two Upper Zakum shipments have been delivered through the Platts trading window, marking the highest level of activity seen in years. However, the substantial number of Oman shipments, which makes nearly 70% of the grade's recent export volume, triggered worries about potential shortage in physical cargoes.
Last month, the transaction was West-focused whereas Asian demand was relatively soft. Western buyers found spot Middle Eastern crude reasonable due to subdued Asian demand as many Asian refiners were busy with the maintenance work. However, with China demand rising now, higher prices for oil are expected.
A Boon for BNO ETF?
United States Brent Oil ETF (BNO - Free Report) tracks Brent crude oil, which looks to track the daily changes in percentage terms of the spot price of Brent crude oil. Brent crude is extracted from the North Sea and acts as a reference for pricing oil from Europe, Africa, and the Middle East. Plus, the Middle East uses the Dubai Crude benchmark.
As the Brent crude has exposure to Middle East too, the higher demand for Middle East oil should benefit the BNO ETF. The fund is off 11.5% this year and has lost 3.4% past month. The fund has retreated 3.1% last week. However, the latest Asian move could benefit the fund over the medium term.
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Will Higher Asian Demand Benefit Brent ETF (BNO)?
Though global oil prices remain subdued currently due to global growth worries, Middle Eastern oil is experiencing an extraordinary surge in prices. Asian refiners, particularly from China to Japan, are driving this increase in demand, resulting in a spike in trading activity.
The demand for Middle Eastern oil has jumped in recent weeks, with spot differentials for August-loading Oman crude and Abu Dhabi's Murban grade undergoing considerable price increases. Asian refiners, including China's Rongsheng Petrochemical, Taiwan's Formosa Petrochemical, and processors in Japan and Thailand, have been aggressively buying barrels from the region, per oil price.com, as quoted on Yahoo.
The post-COVID economic recovery in China has been a major tailwind. Unipec, a unit of China's leading refiner Sinopec, TotalEnergies SE, and Shell Plc have been involved in busy trading activities for Dubai crude partial contracts on the Platts trading window.
Approximately 40 Oman cargoes and two Upper Zakum shipments have been delivered through the Platts trading window, marking the highest level of activity seen in years. However, the substantial number of Oman shipments, which makes nearly 70% of the grade's recent export volume, triggered worries about potential shortage in physical cargoes.
Last month, the transaction was West-focused whereas Asian demand was relatively soft. Western buyers found spot Middle Eastern crude reasonable due to subdued Asian demand as many Asian refiners were busy with the maintenance work. However, with China demand rising now, higher prices for oil are expected.
A Boon for BNO ETF?
United States Brent Oil ETF (BNO - Free Report) tracks Brent crude oil, which looks to track the daily changes in percentage terms of the spot price of Brent crude oil. Brent crude is extracted from the North Sea and acts as a reference for pricing oil from Europe, Africa, and the Middle East. Plus, the Middle East uses the Dubai Crude benchmark.
As the Brent crude has exposure to Middle East too, the higher demand for Middle East oil should benefit the BNO ETF. The fund is off 11.5% this year and has lost 3.4% past month. The fund has retreated 3.1% last week. However, the latest Asian move could benefit the fund over the medium term.