LONDON: West African crude oil staved off downward pressure on differentials on Thursday as contango and buying in India helped to keep prices versus dated Brent steady.
Strong demand for West African crude in India has helped to absorb cargoes, particularly from Nigeria, and boost premiums to dated Brent. India's IOC awarded another tender on Thursday for May delivery, including Nigeria's Bonny Light and Qua Iboe.
"There is still some strong demand from India," one trader said. "Differentials have started to come under pressure, but the contango in the market could hold it off for the time being."
Contango, the market structure in which future prices are above the current levels, is also supportive because sellers are happy to wait until the last minute to book deals rather than cut prices to sell more quickly.
Demand from Asia is expected to weaken, with strategic storage in China nearing capacity and India issuing a tender to buy Basrah crude oil from Iraq, rather than an African grade, to fill the roughly 8 million barrels of strategic storage that is ready to take cargoes.
Traders said that sellers of Angolan crude are increasing the prices they want for May-loading cargoes because of strong strong demand.
The May export programme was slightly below what was available for April, though traders said that could change if issues with the platform that supplies Saturno crude are resolved.
Platform operator BP said the force majeure on Saturno will last about eight days from when it was declared on March 16.
The oil company declared force majeure after a power loss at the PSVM oil project's floating production, storage and offloading (FPSO) vessel off Angola on Sunday.
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