LONDON: West African crude oil differentials came under renewed pressure on Tuesday as equity holders sought interest in almost 50 cargoes still available and unsold for loading in October, more than half-way through the monthly sales cycle.
"It is rare that so many cargoes are still on offer at this time of the month," said a West African crude oil trader with a large state-owned trading house. "A quarter of the Angolan programme and almost half of the Nigerian loading schedule are still unplaced, and of course it is putting pressure on levels."
Export programmes for West African crude oil are published around the 20th of each month, or up to six weeks ahead of the start of each loading month. Cargoes for most programmes are usually placed within a couple of weeks.
But low demand from US refiners, who have ample supplies of domestic high quality shale oil as an alternative, as well as limited Asian demand, have made it difficult to sell West African crude in recent months.
The overhang is particularly acute for high quality, light, low sulphur grades such as the benchmark Nigerian crude Qua Iboe. Demand for heavier grades and high sulphur barrels is slightly stronger as a result of the absence of Iranian crude from some markets due to sanctions.
Around 35 of the 72 Nigerian cargoes loading in October were reported available from primary buyers or equity holders, including several cargoes of all the major grades.
Qua Iboe: Traders said the last deal was around dated Brent plus $2.20. Most recent offers were reported close to this level but potential bids were pitched much lower, around dated plus $1.90 to plus $2.00.
Bonny Light: Trading at a discount of 25 cents to Qua Iboe, due to unreliable loading dates and variable quality. The last traded cargo was reported sold around dated Brent plus $2.15 on a netback basis via a tender into India. The closure last week of a pipeline feeding the Bonny export terminal had not affected loadings, traders said.
Agbami: October cargoes reported sold now but at fairly substantial discounts to other light Nigerian grades, despite a revival in naphtha crack spreads. Agbami assessed around dated Brent minus $1.00.
Escravos: reported talked around dated Brent plus $2.00.
A total of 13 of 55 cargoes for October remained unsold, comprising three Dalia, two Girassol, two Cabinda, plus one each of Pazflor, Plutonio, Saxi, Palanca, Kuito and a Kissanje.
Pazflor: the remaining cargo for October was assessed around dated Brent minus 90 cents and two recent cargoes were said to have been sold close to that level; Statoil sold Unipec a Pazflor cargo for Oct. 5-6, while Exxon sold CNOOC an Oct. 14-15 cargo, both on Friday, traders said.
Nemba: Eni sold BP a Nemba for Oct. 29-30 at around dated Brent minus $1.50, traders said, and Sonangol sold Repsol an Oct. 16-17 cargoes, both not far from dated Brent minus $1.50.
"Nemba has been lower, partly because CPC Taiwan, which used to be its premium buyer, hasn't been importing it," said a trader. "US buyers have also been much less evident."
Girassol: both October available cargoes were reported offered at dated Brent plus 40 cents with potential buyers closer to plus 20 cents, traders said.
Dalia: The three cargoes were said to be on offer at around dated Brent minus 30 cents but bids much lower, around minus 70 cents.
Kissanje: The remaining October cargo was worth around dated Brent minus 20 cents, traders said.
Saxi: Sonangol sold Unipec its stem loading Oct. 8-9 at an undisclosed price, traders said.