Nigerian October crude cargoes are selling very slowly due to tepid demand caused by an oversupply of light sweet crudes, trading sources said Friday.
There was almost half of the October program or 30 odd cargoes still available which, sources said, was very long for this point in the trading cycle.
"The structure is at a contango of 80 cents and differentials are correcting. Nigerian crudes have been slow to sell, despite better refining margins, as the Atlantic Basin was awash with material, especially light sweet crudes," a trader said.
Sources said Nigerian crudes had been slow to sell despite better refining margins as the Atlantic Basin was inundated with too many crudes especially light sweet crudes.
"[Refining margins] are still looking pretty good in Europe," a second trader said. "On the Nigerian side, it is difficult to know where deals are struck so far, but we can see that most offers have not been changed [much]."
Sources said light sweet crudes were struggling even in the Mediterranean and North Sea and with Libyan exports rising quite sharply in the last month, differentials for such crudes were likely to remain under pressure.
"The light sweet [crudes] are really in the doldrums still," a third trader said. "Libya [coming back] is starting to hit the Med and it is therefore hurting West African arbitrage values into that region. Look at [the values for] Azeri Light."
Sources said some spot activity was heard later in the week.
Traders said the Qua Iboe for October 25-26 loading was heard sold to an end user while the October 29-30 Brass River stem was heard sold to a Northwest European refiner. Earlier in the week, the October 7-8 Qua Iboe was also sold though details of the buyer could not be confirmed at the time of writing.
A fourth trader said grades such as Qua Iboe are really struggling to clear. "One way or another, this should impact both Bonny Light and Bonga. So while overall the market is stable, I am pretty bearish and the market is still pretty long oil, which is why the Brent structure is where it is," the trader said.
