Differentials for the lightest end of the Nigerian crude oil complex -- light, condensate-like Agbami and Akpo grades -- against benchmark Dated Brent have fallen as an abundance of sweet crude in the Atlantic Basin has made it difficult for it to land into Europe and as major buyer India has mostly sated its March-loading demand.
On Thursday, Platts assessed Agbami FOB and Akpo FOB cargoes at a discount of $1.10/b to the West African Dated strip. This is the lowest level for the two grades since December 12, 2015, when they were at Dated Brent minus $1.15/b.
Both grades have dropped precipitously since the beginning of December, when Agbami briefly went into positive territory at a premium of 5 cents/b to the WAF Dated Strip and Akpo was assessed at flat to the WAF Dated Strip.
Large volumes of Mediterranean sweet crudes such as Kazakhstan's CPC Blend and Algeria's Saharan Blend, refinery maintenance in Europe, sluggish demand for light naphtha-rich North Sea grades and more of a focus on heavy sours by a number of refineries -- and subsequent falling differentials for sweet Mediterranean and North Sea grades -- have made it difficult for Agbami and Akpo to find buyers in Europe.
Around half of the eight Agbami March-loading cargoes have sold and three of the four Akpo March-loading cargoes also still available, trading sources said.
Major buying refineries of Nigerian crude in India have also now finished their March tendering cycle and due to limited interest from Europe, some of the typically attractive grades to India, like Agbami, will have to discount further to find homes, traders said.
"Europe has a lot of cheaper options in the North Sea and in the Med -- I don't think Europe [will be] supporting Nigeria," said one West African crude trader. "India could come back in but I don't think they will buy [all the unsold barrels]. Agbami and Akpo are going to struggle in next couple of weeks and will correct further."
