LONDON: A larger-than-usual purchase from India's IOC supported West African crude oil on Thursday, but a nagging backlog of cargoes kept a lid on any movement to differentials.
IOC awarded its tender for January delivery to three firms, including ExxonnMobil, Chevron and Vitol, traders said. While it has taken 2-3 million barrels in recent tenders, the 5 million was somewhat of a surprise and was expected to help clear some of the persistent backlog in availabilities.
But with more than 40 million barrels fighting with Mediterranean and North Sea crudes for buyers, the prospects were not good for differentials.
Also, at least one new buyer of Africa's crude oil - Venezuela - is struggling to pay on time. Big oil suppliers have started requiring prepayment for crude and products cargoes to Venezuela's PDVSA, and two cargoes of West African oil are sitting offshore, waiting for payment.
Additionally, the prospect for using mega vessels to store oil until the market recovers is hampered by record high freight rates, market sources said. On top of this, the January Nigerian programme, due later this week or early next week, will add to the overhang.
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