Nigeria’s Qua Iboe crude differential at 20-month low

28 June 2012, Sweetcrude, HOUSTON – NIGERIA’s benchmark crude Qua Iboe has pushed to a 20-month low and other Nigerian grades to multi-month lows, by persistently soft global demand for light, sweet crude, and the resulting overhang, according to Platts data.

Platts assessed Qua Iboe on Tuesday at Dated Brent plus $1.325/barrel, the weakest since Oct. 26, 2010.

Nigerian grades across the board have been steadily descending for nearly two months as the weak global demand for the crude has left numerous Nigerian cargoes unsold. More than a dozen from the country’s July program still seek homes at a point in the month when historically nearly all cargoes would be sold.

This overhang coincides with Nigeria’s gradual release this week of its August program, which contains higher monthly volumes for some grades.

Qua Iboe, for instance, is scheduled to load 12 cargoes, totaling 11.4 million barrels, in August, compared to 11 cargoes at 10.45 million in July. And the lighter the grade, the greater the fall.

Nigeria’s naphtha-rich Agbami, the lightest and sweetest West African crude assessed by Platts, has hit near daily record lows during June. Platts assessed it Tuesday at Dated Brent minus $1.205/barrel, the weakest since Platts began assessing the grade in July 2009.

But even those Nigerian grades that should be propped up by fundamentals have fallen, sources said. Distillates-rich Forcados, for instance, has dipped to an 11-month low, despite diesel, gasoil and kerosene cracks at near 2012 highs.

Platts assessed Forcados Tuesday at Dated Brent plus $2.475/b, the weakest since July 27, 2011. “It’s been a victim of an overall fall in demand and competing grades,” a market source said of Forcados trajectory. “Has a floor been found? We’ll see.”

Among the largest drops has come to Bonny Light, which sank to a 29-month low on chronic force majeure issues. Platts assessed Bonny Tuesday at plus $1.045/b, the lowest since December 15, 2009.

The drop is not limited to Nigerian grades as Angolan grades, too, have come under pressure as demand from Chinese companies, the traditional buyers of Angolan crude, has to date weakened.

Hungo can be viewed as a bellwether, as it’s a favorite for Chinese refiners, sources said. As of Wednesday, three of six August Hungo cargoes remain available, and two of those cargoes already spoken for occurred automatically with Sonangol’s allocations last Thursday.

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