Seoul — South Korean imports of US crude oil tumbled 67.9% year on year in December 2020, marking the biggest decline since the country began North American crude purchases in 2015, according to data from the Korea Customs Service released Jan. 15.
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Local refiners imported 583,162 mt, or 4.27 million barrels, of US crude in December, compared with the 13.32 million barrels they received in the same month of 2019, and the cutback also marks the eighth consecutive monthly decline, the customs data showed.
The December shipments from the US were also down 34.7% from 6.54 million barrels received in November.
For the full year 2020, US crude imports fell to 104.08 million barrels, down 24.5% from 137.89 million barrels in 2019.
The sharp decline for the year was largely attributed to less competitive prices of North American export grades and weakening domestic demand for refined oil products, according to refinery trading sources based in Seoul.
North American benchmark WTI used to trade at a steep discount to Brent and Dubai a few years ago, but such discounts have dissipated over the past months, which have prompted South Korean refiners to aggressively cut back on light sweet US crude purchases, the refinery sources said.
Majority of US crude that South Korean refiners purchase consist of light sweet grades, including WTI Midland and Eagle Ford, but these companies are reluctant to buy high volumes of the light and
middle distillate-rich refinery feedstock due to dismal domestic demand for gasoline, jet fuel and diesel.
On the contrary, South Korea's crude imports from its top supplier Saudi Arabia jumped 60.3% year on year to 4.42 million mt, or 32.4 million barrels, in December, compared with 20.21 million barrels in the same month of 2019. It marks the fourth consecutive increase since September.
South Korean refiners favor grades from their traditional Middle Eastern suppliers such as Saudi Arabia because of the relatively shorter voyage time compared with others such as the US, while the companies see their staple diet of Persian Gulf grades as the most reliable and economical feedstock option in times of market uncertainty, a refinery official said.
In total, the world's fifth-biggest crude buyer, imported 11.33 million mt (83.05 million barrels or 2.68 million b/d) of crude in December, down 7.2% from 89.47 million barrels a year earlier, the customs data showed.
For full-year 2020, the country's crude imports dropped 8.7% from 2019 at 978.86 million barrels.
South Korea's crude stockpiles fell 5.5% year on year to 41.58 million barrels in November, compared with 44 million a year ago, according to state-run Korea National Oil Corp, or KNOC. The country's overall stockpile of refined oil products also declined 5.4% year on year to 60.08 million barrels in November, compared with 63.53 million barrels a year earlier.
South Korean refiners and condensate splitters processed 76.29 million barrels of crude in November, down 16.8% from 91.73 million barrels a year earlier, due to tepid demand for oil products amid the
protracted coronavirus pandemic.
Final oil data for December will be released later this month by KNOC.