By Chinelo Obogo
Nigeria’s crude oil for May loading is finally starting to sell after a struggle to find buyers due to low demand in Europe.
Bloomberg reports that while around 10 cargoes, which is about 20% of this month’s exports remain unsold, a price decrease has spurred renewed interest as market insiders anticipate more deals to be finalised this week as sellers adapt their pricing strategies.
Traders say the sluggish sales sprang from the downtrend market in the Atlantic Basin, signifying that the overall demand for oil in the region is low. Other reasons for bearish market is due to increased US oil exports which are flooding the market, driving down prices of crude oil from Europe and West Africa and even though European refineries are resuming operations after maintenance, the demand hasn’t recovered sufficiently. Similar oil suppliers to Europe, like those producing Azeri Light and West Texas Intermediate, are also experiencing price drops due to the weak market.
Nigeria’s lag was also driven by sellers seeking premiums over the Dated Brent benchmark that proved too high for refiners in Europe, according to Energy Aspects Ltd. Some Nigerian grades were being priced more competitively, including Qua Iboe to Asia and Bonny Light to the Mediterranean or East, with the overhang slowly reducing, Sparta Commodities said in a note earlier this week.
However, an additional 30 cargoes of Nigerian oil for June loading are still available for purchase and July’s supplies are due to be offered for sale later this month.
Director of short-term oil market research at FGE, James Davis said, “We’ve got much weaker margins so crude demand is taking a hit,”, while EA global crude analyst, Christopher Haines, said: “May cargoes were at a premium that didn’t work that well into Europe, but lower offers have seen volumes move. Stronger forward diesel pricing is also helping.”