India abandons Nigeria’s crude for others

—Nigeria’s Qua Iboe crude May cargoes struggling to clear – Traders
Oscarline Onwuemenyi, with agency reports
21 April 2016, Sweetcrude, Abuja – Nigeria’s flagship crude export grade Qua Iboe has seen its May program struggle to find homes, trading sources said, citing the main buying region India choosing other West African crude grades over Qua Iboe as one of the main reason for the grade’s slow-moving program.

*Crude oil cargo vessel.

*Crude oil vessel.

“[Indian refinery] IOC sidestepped Qua in the last two tenders,” said one West African crude trader.

Other traders also noted the lack of Qua Iboe cargoes being bought by the usual Indian refineries BPCL, HPCL and MRPL, as well as Indonesia’s Pertamina during their May tenders.

These tenders instead took similar grade Bonny Light, or other West African crude grades such as Nigeria’s Agbami, or Angola’s Pazflor and Kissanje grades

Out of the 11 May Qua Iboe cargoes, five currently remain unsold, said trading sources. On top of that, there are also two April cargoes available, with the June program expected in the next few days.

As it is late in the trading cycle for remaining cargoes to go to Asian refineries, traders said they expect the barrels to head to Europe where they will face stiff competition from local grades in the North Sea and in the Mediterranean.

So far in May, despite slow demand, most Nigerian grades have seen steady prices due to a tightened market as a result of the Forcados grade in force majeure, and Erha grade not having a published May program. But in order to attract European buyers, Qua’s differentials to Dated Brent will have to drop, said several traders.

“Really truly, it’s not great right now – freight is expensive, there is no contango in the market and [Qua] is competing into Europe with Med grades — and all the [May] tenders are over now,” said a second West African crude trader.

Platts assessed Qua Iboe on Monday at Dated Brent plus 65 cents/b, with the grade dropping 10 cents/b from its assessment the previous week.

Meanwhile, Reuters has reported that Nigeria’s June loading programmes were still emerging, with a slight increase in Qua Iboe exports to 317,000 barrels per day (bpd) but one less cargo for each of the Agbami, Escravos and Usan export plans

Senegal’s SAR bought a cargo of Qua Iboe in its tender, but the grade remained easily accessible. The arbitrage to the United States had mostly closed as dated Brent was trading at a larger premium relative to U.S. WTI.

As a result, the bulk of the some 15 cargoes left for May loading were expected to seek an outlet in Europe.

Despite an ongoing force majeure on Forcados, and the still-missing Erha export plan for May, Nigerian crude was in ample supply.

Qua Iboe differentials were under pressure, as several May cargoes are left for sale and there is a slightly longer bpd programme in June.

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