Angolan crudes Dalia and Pazflor have hit 2-1/2 year highs versus Dated Brent amid support in recent weeks from strong fuel oil cracks, sources said.
The two grades were assessed at Dated Brent minus $1.60/b Tuesday by S&P Global Platts, the highest since June 3, 2014 for both Dalia and Pazflor.
Hungo, another Angolan heavy crude, hit Dated Brent minus $1.65/b, its highest since June 2, 2014.
"Singapore fuel oil cracks are marginally negative, very close to flat," a refiner said, adding that had led to several refiners recently adjusting their crude intake to heavier crudes.
In addition, a narrowing exchange of futures for swaps (EFS)helped attract Asian buyers to West Africa.
The front-month EFS was assessed at $2.04/b at the end of the London Platts Market on Close assessment process Tuesday.
A narrowing EFS means buying Brent-related crudes and selling them into a Dubai-indexed market becomes more profitable. Typically, a reading below $2.50/b indicates an open arbitrage.
Another factor in Dalia and Pazflor's strength was that, for the first time in years, Sonangol allocated all its loadings on a term basis for the January program, taking over 13.4 million barrels out of the market.
For December, Sonangol offered six of its cargoes on the spot market.
"It changes the market dynamics when Sonangol does not offer any of its cargoes on a spot basis as market participants do like to look at what Sonangol thinks of the market, and buyers and sellers often take their offers as a first indication of the market being stronger or weaker than the previous month," a trader said.
Around six million barrels of Dalia and and four million barrels of Pazflor are typically exported each month, together making up around a fifth of Angolan crude exports.
Dalia and Pazflor are two of the heaviest Angolan crudes at API's of 23 and 25.6, respectively, and generally trade at parity with each other given their similar characteristics.
Hungo, one of the heaviest Angolan crudes at an API of 28.3 and which usually exports around 3-4 cargoes/month, has a high yield of residue, gasoil and diesel all of which relatively good refining margins at the moment encouraging buying, a source said.
