Nigeria’s crude oil losing market appeal
International crude oil traders are said to have shunned the country’s export of sweet crude for the months of May and June 2015, making it difficult for the country to find buyers for the product, of which the country’s 2015 budget was planked on.
For example, Nigerian crude cargoes for January loading struggled to sell due to very weak demand with an oversupply of sweet crudes at the international market.
The Guardian gathered that the country’s crude oil suffered the same fate in March, April, May and June 2015 cargoes,
Asian and European demand for Nigeria and other West African cargoes has been slow so far, due to the availability of cheaper crude oil at the international market.
China, which became a large buyer of Nigerian crude oil, has reduced importation due to heavy build up of its products. The country now prefers Angola’s grade.
Specifically, latest information from Organisation of Petroleum Exporting Countries (OPEC) showed that China’s total commercial crude stocks fell by 5.6 million barrels, while product inventories rose 13.5 mb.
At 249.9 million barrels, commercial crude stocks represented a surplus of around 9.1 mb compared with the same period one year earlier. The fall in commercial crude stocks came mainly from the drop in crude oil imports, which declined by around 350,000 bpd to an average 6.3 mb/d. The increase of 5.5 per cent in crude throughput also contributed to the decline.
However, the increase of 2.1 per cent in crude oil production limited further drops in Chinese crude oil commercial stocks.
In contrast, total product stocks in China rose by 13.5 million barrels to end March at 161 million barrels, which is 2.5 million barrels below a year ago at the same time. All products went up. Gasoline rose by 5.2 mb, ending March at 52.3 mb driven by a decline in gasoline demand.
Early this year, the Organisation of Petroleum Exporting Countries (OPEC) disclosed in its monthly report that Nigeria’s 35 million barrels of crude oil was stranded at the high sea.
According to the cartel, Asian countries, which Nigeria turned to when the United States stopped buying Nigeria’s crude oil due to the shale boom, now prefer Angolan grades.
OPEC said that low European refinery demand amid weak gasoline and naphtha margins has put pressure on West African crudes, most especially, Nigerian light sweet crude.
“Asian refining margins dropped slightly during December on the back of losses seen in the gasoline and middle distillates cracks as the strong seasonal demand within the region was partially outweighed by increasing supplies from several countries in the region”, it added.
A fair share of Nigerian export crude cargoes every month are grappling to attract end-user and refinery demand, and are instead being stored on ships and on storage terminals, idling away.
The bulk of the oversupply in the Atlantic Basin crude market is composed of Nigerian crudes. A lot of Nigerian crude is floating on the seas and in storage tanks with no home and no destination.