17 March 2015, Lagos – The decline in crude oil production in Nigeria, Iraq and Libya drove down output from the Organisation of Petroleum Exporting Countries to its lowest in February since June last year, according to the cartel’s latest monthly report released on Monday.
According to secondary sources cited in the report, total OPEC crude oil production averaged 30.02 million barrels per day in February, a decrease of 140,000 bpd from the previous month. In December, the group’s production was 30.25 million bpd.
In July last year, OPEC output was put at 30.117 million bpd, up from 29.786 million bpd in June.
“Crude oil output decreased mostly from Iraq, Nigeria and Libya, while production showed increases in Saudi Arabia and Kuwait,” the 12-member oil cartel said.
Nigeria’s oil output dropped to 1.896 million bpd in February from 1.96 million bpd in January, according to secondary sources cited in the report.
Based on direct communication, the country’s production in February was put at 1.777 million bpd, down from 1.796 million bpd and 1.89 million in January and December 2014, respectively.
Meanwhile, a growing overhang of unsold Nigerian crude oil cargoes for March-loading could depress values for the April programme, West African crude traders told Platts, a US-based publication that provides information on energy and metals data, on Monday.
It was said that with the March programme in the middle of being loaded at the terminals, pressure was growing on traders to dispose so-called “floating” cargoes, which had been loaded before being sold.
“Around 10 million to 12 million barrels are currently on the water from the March programme,” a European refiner said. “The lack of pricing attractiveness for April cargoes is driving sluggish demand at this stage (of the trading cycle).”
In addition, nearly half of Nigeria’s April programme is still available, according to Platts cargo tracking.
With the May loading schedule expected soon, traders said that competition among sellers could soon become more intense.
Shipping sources said that the volume of Nigerian crude currently sitting in tankers awaiting orders should tighten up the West African Suezmax position list in the coming weeks.
The longer that the Nigerian crude cargoes on the ships remain unsold, the longer the ships would be kept off WAF tonnage lists, sources said.
It was said that this reduction in the supply of vessels would then likely lead to a rise in WAF Suezmax freight rates.
According to market sources, stubbornly high freight rates in the Nigerian market over the past week has been having a knock-on effect on already high differentials to Dated Brent in the region.
Traders said that higher crude offer levels in the market, in conjunction with higher freight costs, were discouraging purchases of light sweet WAF crudes such as Nigeria’s Qua Iboe, with European refiners turning instead to sweet, short-haul Mediterranean grades such as Azeri Light.
With European buyers apparently showing only limited interest in the Nigerian market because of the high freight rates and high offer levels, most buying of Nigerian grades was coming from Asia.
– The Punch