West African Oil Slow to Sell
(Bloomberg) -- West Africa’s oil exports due for loading next month have struggled to sell, due to weak demand from the region’s regular customers in Asia and Europe and tougher competition from rival suppliers.
As much as half of Nigeria’s planned crude loadings for May haven’t yet found buyers, according to oil traders specializing in West African grades. The nation -- West Africa’s biggest oil producer -- is due to export around 1.68 million barrels of crude a day in May, the largest rate in three months, according to data compiled by Bloomberg.
The recent rebound in U.S. crude production following freezing weather has meant a surge supplies of U.S. light crude -- a key rival for Nigeria -- toward Europe, the International Energy Agency said in its monthly report on Wednesday. That’s compounding already-slow sales of Nigerian crude to Europe, where buying has been weaker for months as refineries ran at low processing rates amid the pandemic.
It’s not just Nigeria that is facing weaker demand. Africa’s second largest crude producer, Angola, has yet to sell about 30% of its 33 export cargoes for May loading, according to traders. Each shipment hauls between one and two million barrels of crude, with the majority of cargoes typically sailing to refineries in China.
Another crude favored by China, the Republic of the Congo’s Djeno grade, has also been slow to sell its upcoming volumes. Three shipments for loading next month are still available out of a total of seven consignments scheduled, traders said.
The value of West Africa’s crude in comparison to future supplies in the benchmark North Sea region has “deteriorated steadily” in recent months because of weaker demand from Europe and Asia, the IEA said.
Nigeria’s Bonny Light crude was priced at 85 cents per barrel less than benchmark North Sea Dated Brent earlier this month, sliding from a discount of 25 cents per barrel in February, according to the agency. Angola’s heavy-sweet Cabinda grade fell to a discount of 55 cents per barrel to North Sea Dated in early April, compared with a premium of 35 cents in February.
Sales to Asia have also been disadvantaged by the widening gulf in a key oil price marker for West-East crude flows that makes Africa’s oil more expensive to ship to Asia.
© 2021 Bloomberg L.P.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.