BP has become the first major trader to make a physical delivery to the Shanghai International Energy Exchange (INE) since China launched the futures market in 2018, sources have told Reuters.
Neither BP or INE have commented on the news. According to Reuters’ sources, BP delivered 3 million bbl of Iraqi oil Basra Light into an INE storage facility in Shandong province in eastern China earlier in July, and is set to deliver another 1 million bbl of Abu Dhabi Upper Zakum crude under an August contract.
Reuters reports that there have been ‘a flurry’ of deliveries since May, after buying by Chinese investors drove INE futures to a premium over Brent, making the contract profitable. However, the two markets have now largely converged.
Other sources told the newswire that Mercuria will be the next international trader to deliver to the INE, with two deliveries of 1 million bbl of Upper Zakum crude for August and for September. Mercuria has not commented.
Demand for storage space for increased deliveries has caused INE to double its storage tank capacity to almost 60 million barrels since April.