21 July 2014, Lagos – Large quantities of Nigerian crude oil cargoes for export are still unsold on Friday, even as September supply came to market, increasing pressure on the already weakened differentials.
It was learnt that about 20-25 of Nigerian cargoes are still available for sale out of a total figure of 65 for August which 40-45 have already been sold.
According to traders, it was the biggest supply excess they had seen for years and that sellers may be forced to keep differentials at multi-year lows to attract buyers.
“With the August cargo overhang going into the new September trading cycle, it’s hard to see any upside in grade differentials, especially for Nigerian,” a trader said.
The trader added that freight costs for suezmax-sized vessels were also acting as a deterrent to European buyers, who would look to buy cargoes from nearer destinations such as the North Sea or Mediterranean.
“Freight has gone crazy, so people who are buying for later dates will wait in hope that prices will fall,” another trader said.
A provisional shipping list showed that Nigeria’s Qua Iboe crude stream will load 380,000 barrels per day (bpd) in September including two cargoes deferred from August, down from an initially planned 398,000 bpd in August.
According to a trader, “The remaining cargoes for August loading had sold by Friday”. Traders however said they would assess levels for September cargoes in the region of N193.2 ($1.20) over dated Brent, though offers had yet to emerge.