Nigerian crude values for April are beginning to rise steadily on higher refining margins and healthy demand from Europe, trading sources said Friday.
Spot trade in Nigerian cargoes has increased this week, with some high offers and deals heard done for cargoes in the April loading program.
Refining margins in Europe and Asia have both increased significantly compared with last month due to higher cracks for fuel oil and middle distillates, and this has boosted values for Nigerian light sweets.
Sources said Qua Iboe was offered at Dated Brent plus $3.10/barrel with a trade heard done close to Dated Brent plus $3/b. This is compared to last month when the last few March Qua Iboe trades were heard done near to Dated Brent plus $2.20-2.50/b, traders said. "Refining margins have improved which has helped differentials go up," said a trader. "The program is also a bit shorter, and freight has come off again to more realistic levels which is also supporting the market."
Sources said there has been some strong demand from refiners in Northwest Europe and Mediterranean this week, with a couple of Qua Iboe stems heard traded the previous day.
As a result, even offer levels increased sharply. Sources said Bonga was offered at Dated Brent plus $3.60/b, Forcados at Dated Brent plus $4.10/b and Akpo at Dated Brent plus $1.40/b.
"Cargoes have moved quite quickly for so far. Refining margins have improved which helped some of the grades to recover from values seen the previous month," said another trader. "Cracks have improved, fuel oil is performing much better, even distillates have better cracks, this has helped sustain some of the demand and differentials have increased."
Sources also said that another reason for a bullish market and increased interest from Europe was because quite a sizeable amount of cargoes had been covered by Indian tenders.
IOC had already bought almost 9 million barrels of West African crude for April loading so far, more than half of which was from Nigeria, and this was supporting Nigerian crude values. And, results of another IOC April tender were due later Friday.
