Financial Energy Review
by Abisoye Shola………………
Nigeria’s crude oil market in Europe is again being threatened by United State crude supply. This is coming couple of years after the same crude pushed out Nigeria’s crude supply to the American market.
According to market survey the increasing flow of the United States crude into Europe is now displacing the Nigeria’s traditional light, sweet crudes in Europe.
S&P Global Platts, the UK based oil market price data company confirm that this market competition between Nigeria’s crude and that of the United States is forcing sellers of Nigerian and Mediterranean crudes to discount September-loading cargoes.
The company said that traders in the oil market particularly those of Europe are complaining that the spot market for September-loading cargoes from Nigeria had not seen any activity for more than two weeks.
It is said that would-be buyers in Europe were waiting for offers to fall further, especially if the Asian market is not as vibrant as it was some months back.
According to traders, the price for one of Nigeria’s crude oil grades, Qua Iboe, for example, was approached Dated Brent minus 50 cents per barrel in an August 7 tender by South Africa’s Sasol, which would imply the grade lands in Europe at a significant discount to Azeri Light.
Of that total, WTI Midland accounted for 414,000 bpd, as limited demand for WTI into Asia pushed more of it into Europe.
“The same slowdown in crude buying in Asia has also led to a greater amount of North Sea, Mediterranean and Nigerian oil in Europe, putting prices under further stress” they said. Therefore US oil is expected to continue flowing into Europe in August.
According to Traders the flow of US crude represents a significant challenge for sellers of Nigerian crude in particular, given that the country’s mainstay grades, such as Qua Iboe and Bonny Light, have been shunned by the usual big buyers in Asia.
Sellers are said to be looking-for-bids mode. “They don’t see any demand at all. Light crudes are really taking a step down with ample Midland around,” another trader said, pointing to the length still available on Nigeria’s 1.5 million bpd September programme, and with just a week to go before October trading would usually commence. All the grades are competing…nothing is moving” they said.
The competitive environment has also put pressure on local Mediterranean sweet crudes such as Azeri Light, Saharan Blend and CPC Blend.
Indian Oil Corporation, the country’s largest state-run refiner, has reduced its run rate to 75 per cent across its nine refineries, from 93 per cent in the first week of July.
