Nigerian crude prices are starting to fall as the remaining 15-20 Nigerian June cargoes struggle to sell due to weakening refining margins, trading sources said Monday.
The remaining unsold cargoes are looking to find a home in Europe, although a fall in regional sweet crudes, particularly in the Mediterranean, is starting to put pressure on light sweet crudes in Nigeria.
Sources said there were still 15-20 June loading cargoes available, and prices were expected to trend lower if the remaining barrels failed to clear soon. Some spot activity was heard towards the end of last week.
Qua Iboe was assessed at Dated Brent plus $2.65/barrel Friday. But on Monday, traders were pegging it below $2.60/b.
"Twenty million Nigerian barrels remain available," a trader said.
Sources said there were still four to five Qua Iboe June stems unsold in Nigeria. But they added that these cargoes were expected to be kept by the equity holders for their own system.
"There are still plenty of cargoes on the market, and the offers are still quite high. The grades like Agbami and Akpo sold well, but some grades are struggling. There are still quite a few Brass River cargoes, and the spread between Qua Iboe and the other grades seems to be widening," a second trader said.
Indian tender demand for June has also been low, which put some pressure on Nigerian crudes.
State-owned Indian refiners bought just 8.35 million barrels of West African crudes through tenders for loading in June, compared with 13.975 million barrels for May, a fall of 40%, according to Platts data.
The main reason for the drop was that India's biggest buyer of West African crude, Indian Oil Corp., issued only one June-loading tender compared with three May-loading tenders.
"[Sentiment] is bearish...I would think the hope of moving barrels East is dead due to the low Middle Eastern OSPs, and I think IOC looking to July confirms that...NWE margins are poor," a third trader said.
