Following the US emergence as oil exporters, Nigeria has begun to suffer from the global glut in oil as Nigeria’s March crude programme is struggling to find outlets, with some 25 million barrels still unsold even as traders revealed the April loading programme is expected to start arriving this week.
Offers for the oil have gone mostly quiet as those holding the cargos wait for reluctant buyers to return to a market awash with choice for oil, however the situation is likely to take a frightening twist as Iran is set to begin exporting its crude.
As of February 16, the price of crude oil (Bonny Light) stood at $32.32 per barrel, while the official naira exchange rate was N197 against the dollar, according to the Central Bank of Nigeria.
Sellers were offering Qua Iboe, one of the country’s oil grades, at dated Brent plus $1.40, but buyers showed little interest and traders said values were less than $1 per barrel versus Brent.
Most buyers said the differentials would have to weaken somewhat in order to get the cargos moving, particularly with refinery maintenance coming and freight rates increasing to some destinations.
Still, several tenders due this week from Indian refiners would likely clear out a few thousands of the barrels. India is the biggest importer of Nigerian crude oil.
Lower differentials for crude oil from other regions, particularly Urals and Mediterranean crude, were said to have piled pressure on sellers to lower differentials to encourage activity.
The slow movement contrasted with Angola’s March loadings, which traded quickly due in part to larger term contracts with Chinese buyers that left less oil for spot trading.
Angola is expected to export at least 1.8 million barrels per day in April, slightly more than March.
The April loading schedule is expected to start emerging on Thursday or Friday.
Indian Oil Corporation is running two crude buying tenders this week, and the results of both are expected by Thursday.
Fellow Indian refiner, BPCL, also has a buying tender for West African grades loading from February 25 to March 6.