Nigeria's Forcados crude's differential to Dated Brent has fallen to its lowest in six years because seasonal European demand for distillates remains weak, with storage capacity in the region not seeing the usual drawdown in stocks due to mild weather.
On Tuesday, Forcados was assessed at Dated Brent minus 5 cents/b, its lowest since April 14, 2009, when it was at Dated Brent plus $0.075/b, Platts data showed.
Despite an overall depressed Nigerian crude complex, distillate-rich Forcados and similar grade Bonga have been lagging even further behind other grades.
This is a role reversal for Forcados because in previous years it has been one of the Nigerian grades to command the highest premiums to Dated Brent, up to Dated Brent plus $5.25/b in September 2011.
Both grades are seen as less attractive to it usual European refinery buyers, which haven't seen the normal winter pick-up in distillate demand so far due to warmer-than-normal weather.
As a result, the low gasoil cracks compared with gasoline and light-end products such as naphtha have been the focus for many refineries in Europe.
"Nobody is buying distillate grades," said one WAF trader. "There are a a lot of unsold Forcados in the end of December and January and unsold Bonga in January so it's likely that these grades will go at a discount -- how much is the question?" a second West African crude trader said.
Traders estimated that two to four cargoes remained unsold in December, with six out of eight cargoes in January still available too.
