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S.Korea's SK Innovation Sees Oil Prices Staying Low, Eyes US Crude

Source: Reuters 5/30/2017, Location: Asia

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South Korea's SK Innovation , which owns South Korea's top refiner SK Energy, said on Tuesday it expects U.S. shale output to keep oil prices low, and is looking for opportunities to bring in U.S. crude oil.

Competition between the Organization of the Petroleum Exporting Countries (OPEC), which is curbing output, and U.S. oil producers is likely to weigh on prices, SK innovation chief executive and president Kim Joon told reporters at a briefing.

"It seems Dubai oil prices will find it difficult to hit $60 a barrel for the time being," Kim said at a briefing.

Dubai crude is currently trading around $51.37 a barrel and has held below $60 a barrel since mid-2015.

OPEC and some non-OPEC producers last week agreed to extend oil production cuts for a further nine more months to clear a global oil supply glut.

SK Energy had so far felt little impact on its crude supplies as it has maintained a good relationship with Middle Eastern suppliers, said Song Jin-hwa, president and chief executive of SK Trading International.

Refiners in the world's fifth biggest oil importer, including SK Energy, import more than 80 percent of their oil from the Middle East.

"In terms of heavy crude, we have heavily relied on Middle East because it's been the most economical crude and we buy all types of crude oil from Russia, Africa, Europe and U.S., if they become economical," Song said.

"But we don't think our crude slate will change drastically," he said.

South Korean refiners have been looking to bring in more Brent-linked crude in the early third quarter, taking advantage of relatively cheap Brent against Dubai crude.

Earlier this year, SK Energy bought 1 million barrels of Russian Urals for the first time in a decade.

It last bought U.S. condensate in 2015 when it purchased two 450,000 barrel cargoes

Song said the company is still interested in U.S. condensate and heavy crude oil from U.S. Gulf region, as long as it was economically viable.

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