* Africa's second-biggest exporter a barometer of Chinese
market
* Buyers, sellers moot slowdown concerns amid poor Chna data
* Margins, freight costs and backwardation do not favour
Angolan
By Noah Browning
LONDON, June 20 (Reuters) - Angola, a key provider of oil to
China, has suffered its slowest trading month this year as poor
refining margins, high freight rates and subdued demand amid the
trade war between Beijing and Washington curbed its sales.
Angolan crude had been selling out easily each month, with
heavier grades especially coveted since similar Iranian and
Venezuelan varieties evaporated due to U.S. sanctions.
But a surplus of 8 cargoes struggled to find buyers as a
new August programme was released on Monday -- the first
overhang of the year, traders said.
China typically purchases about two-thirds of Angolan
barrels each month, making Africa's second-biggest oil exporter
an important barometer of the Chinese market.
Industrial output growth in China unexpectedly slowed to a
more than 17-year low and investment cooled, official statistics
showed on Friday, and crude oil imports slipped 8% in May from
an all-time high the month before. Asked if signs of slowing growth in China and a sluggish
global economy were stinging demand, a top seller of Angolan oil
said: "That's inevitably part of it."
"The longer the trade war drags on, demand will inevitably
be hit. Then again, a resolution to that could lead to a speedy
turnaround," the source added.
Crude purchases especially among Chinese independent
refineries slowed down, East Asian market sources said, as they
continued to digest inventories purchased in previous months.
"May data has thus far pointed to sluggish demand, with
imports contracting sharply -- and this is before the new round
of bilateral (U.S.-China) tariffs kick in," consultancy Energy
Aspects wrote in a note, which still put demand up at 500,000
barrels per day on the year despite the weakening outlook.
China ramped up imports of Iranian oil in April before
cutting them off due to tougher U.S. sanctions, and Energy
Aspects said it expected new commercial storage to come online.
"The global economy and trade issues are a bit macro for
us," one Chinese buyer said, noting July purchases closer to
home than Angola such as from Gulf producers.
"But anything signalling lower growth and demand, none of
this geopolitical stuff is good."
POOR MARGINS, FEWER BIDS
Margins on the kind of refined products made from heavier
Angolan crude such as jet fuel JETSGCKMc1 plunged to a
six-week low of $12.93 a barrel over Dubai crude at the end of
May before recovering to $14.50 this week.
The premium of Brent crude to Dubai DUB-EFS-1M also
reached its highest levels in over a year, making Middle East
oil a more attractive prospect, before settling down again.
China's lack of interest became clear early in the trading
cycle as Chinese state oil trader Unipec declined to make any
bids, setting the stage for a price slide that has now prompted
somewhat buying by Chinese state and independent refiners.
More worrying for sellers, China repeatedly sought to sell
West African cargoes it was assigned through long-standing
agreements with producers via the publicly visible Platts Window
instead of shipping them home, but attracted little enthusiasm.
All last week Unipec offered a cargo of Mostarda from
Angola's new offshore stream and finally discounted it to dated
Brent minus 80 cents, a plunge from offers for the grade of
around $1.20 in late May.
"Sellers are nervous about Angolan (oil), as they sensed the
lower demand from the Chinese was not fake ... but rather a real
pull-back", a West African trader said.
Differentials for some top Angolan crude grades like Dalia
remained near all-time highs, but attempts by sellers to push
them higher in the absence of Iran and Venezuela's barrels and
new shipping fuel standards set for next year have floundered.
"Sellers got too greedy," the trader added.
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Brent-Dubai Spread https://tmsnrt.rs/2IriU03
Asian jet fuel margins https://tmsnrt.rs/2XZD46G
China crude throughput estimate https://tmsnrt.rs/2IpNU0w
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(Additional reporting By Florence Tan in Singapore; editing by
Emelia Sithole-Matarise)