West African Crude Under Pressure in Quiet Trading

Physical trading of West African oil started slowly this week, with pending tenders and industry events in London forestalling most new physical deals.

More than half of Nigeria's March export programme has yet to trade, and traders said Nigerian crude oil sellers would have to lower their offers in order to offload remaining volumes from the March loading programme.

Faltering gasoline and naphtha margins had also thrown into question the demand for Nigeria's light, sweet oil.

The coming refinery maintenance season was also expected to dampen demand for crude oil cargoes. According to analysts JBC Energy, some 1 million barrels per day (bpd) in crude distillation unit capacity will go offline for planned maintenance in Asia in March.

There has also been confusion over who was allocated some 10 million barrels from Nigeria's March loading programme, which had slowed trading to some extent.

Still, a lower premium of Brent crude versus Dubai <DUB-EFS-1M> was helping to make West African more attractive to Asian buyers.

India's IOC took 5 million barrels of West African crude in its most recent tender.

NIGERIA

• Traders said offer levels for some grades, such as Qua Iboe, needed to come down by 50 cents in order to trade.
• Just over two dozen March-loading cargoes have sold, leaving more than half the programme unsold.
• Traders said there were delays of around six to seven days for the Escravos grade of crude oil due to production problems.

ANGOLA

• While nearly the entire March-loading Angolan programme had traded, some cargoes were being reoffered, in part because of the closed spot arbitrage to the United States.
• Much of the rest of the programme had gone to Asian buyers, which were keen to stock up at low prices.

ASIAN TENDERS

• India's IOC bought Escravos, Bonny Light, Kole, Okwuibome and a Usan in its recent tender.
• Thailand's PTT also has a tender to buy crude oil.

Reporting by Libby George