Singapore: Aggressive crude buying by a Chinese state trader has raised worries over whether there is enough supply to sustain a pricing process that yields the main benchmarks for the more than 12 million barrels per day of oil sold in Asia.

Deals on Monday between Chinaoil and Unipec — units of two Chinese oil giants — saw the former buying a record 10 cargoes, or 5 million barrels, during the Platts Dubai Market on Close (MoC) process on the first trading day of August.

The speed at which Chinaoil, trading arm of PetroChina, is buying crude has alarmed some traders in Asia.

The seller Unipec is the trading unit of Asia’s largest refiner, Sinopec.

If trade continues at 10 cargoes a day, then all available cargoes could be finished by next week, a Singapore-based trader said. “What will happen if all the physical cargoes are exhausted?” The worry is that once the cargoes were traded, a bidder could push prices higher knowing that no more acceptable MoC/sgrades were available.

“Chinaoil will be able to bid at $100 even when Brent

is at $51, because nobody has a cargo to deliver to him,” the trader said.

Platts said it does not comment on hypothetical scenarios and that its MoC process is designed to “operate effectively in highly liquid and less liquid markets.” In the Platts’ MoC process that assesses the Dubai and Oman benchmarks, sellers have to deliver a 500,000-barrel cargo for every 20 Dubai trading lots sold to a counterparty. Crudes approved for delivery are Dubai, Oman and Upper Zakum.

But only three Dubai cargoes are now produced each month because of declining output, traders said.

In October last year, Chinaoil bought a record 22 Upper Zakum cargoes for December-loading, and in April this year, it took a record 49 Oman cargoes, or close to 820,000 bpd, nearly all the crude the sultanate exports.

That means a maximum 74 cargoes could be traded via the MoC system in one month based on historical transactions, although traders doubt all of the records could be repeated as some of the earlier supplies were drawn from storage.

An analyst with a Middle East producer, though, said some cargoes could be recycled through the MoC during a month, raising the number of trades.

Platts, part of McGraw Hill Financial Inc, competes with Thomson Reuters in providing news and information to the energy markets.