(Bloomberg) A wave of strong oil buying by processors in China and Japan underpinned by one mega-refiner’s massive spree has lifted spot premiums in Asia’s physical market, adding to signs of rising global demand.Spot premiums for crude grades favored by Chinese and Japanese refiners, such as Russia’s ESPO and Qatar’s Al-Shaheen, have surged to multi-month highs, according to traders who asked not to be identified. Dubai crude’s prompt timespreads went deeper into backwardation a bullish market indicator with the differential more than doubling from last week.Oil processors and traders are weighing mixed signals from Asia’s market as the coronavirus pandemic leaves an uneven imprint. While key crude importer India has been hit hard by a brutal Covid-19 wave, other nations, especially China, have continued to do well. Those signs of progress add to evidence of recoveries in Europe and U.S. demand, underpinning gains in futures markets.
Spot premiums in Shanghai rose to 70 yuan/mt on February 18 from zero ahead of CNY due to costs during CNY holidays. However, spot premiums turned into wide discounts as of February 25 as SHFE copper prices surged, which stood at around 250 yuan/mt, a decline of nearly 460%. This signified that investors were selling aggressively to generate cash amid cash flow issues. Downstream inquiries were brisk but sellers refrained from lowering their quotes, with spot discounts stabilising between 150-140 yuan/mt.