LONDON: East Asian demand for Angolan oil is recovering slightly after a dismal July loading period as backwardation and freight rates eased, but lacklustre margins provided some headwinds.
ANGOLA
Backwardation, in which the prompt price of Brent crude trades above the forward price, has eased to the lowest levels in months, so oil sent the long distance from Angola to China will not lose as much value as before.
The relatively high backwardation has discouraged more Chinese buying of Angolan for much of 2019, as the longer a crude cargo stays in transit, the more money it costs the owner.
Also providing a boost, a modest narrowing of the Brent-Dubai spread is making Atlantic Basin oil somewhat more attractive to China versus Middle Eastern crudes.
China and East Asia are taking on 10 cargoes, eight of them VLCCs within about as many days for late July or early August loading, as traders have said buying has increased.
But one of China's largest independent refiners, the 240,000 barrel per day (bpd) Shandong Dongming Petrochemical Group will likely shut for maintenance next week for two months, citing abundant fuel in the Chinese market and poor margins.
Around 15 cargoes remain for August loading.
NIGERIA
Northwestern European interest in Nigerian oil remains high after the planned shutdown of the PES refinery has taken much of the US East Coast capacity offline.
Gasoline stocks in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub fell by 9.4pc in the week to Thursday, data from Dutch consultancy Insights Global showed, as exports to the US mounted.
Nigerian exports to Europe were at multi-month highs in June, but resolutions to Russian and North Sea oil outages caused slower trading in July.
Spot asking prices for major grade Bonny Light remained above a $2.50 premium compared to dated Brent.
TENDERS
Indonesia's Pertamina has issued a tender for crude loading Aug. 1-8 set to close on Friday.
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