News Column

Lower Supply Hampers W'africa's August Crude Sale

June 30, 2014

Anayo Korie

Slack demand and ample supply pushed West African crude oil differentials to their lowest towards the end of June as buyers continued to hold back in hope of further price weakness.

About half of the August Angolan loading programme remained available for purchase more than a week after it came to market, selling at a similar pace to July cargoes, but much more slowly than earlier months this year.

Daily Independent gathered that differentials have fallen off since the start of last month, and only a small number of cargoes have traded in the spot market, traders said.

Agency report monitored in Lagos over the weekend revealed that some differentials were unlikely to fall much further.

"It doesn't feel like it will go lower from here, apart from (heavier grades used to make distillates) which look to be pegged too high," a trader said.

He was referring to grades such as Bonga and Erha, which are relatively heavy Qua Iboe's premium has nearly halved from a peak at around $3.50 over dated Brent in May to trade at its lowest since December, Reuters data showed BFO-QUA.

Another trader, however, said there was scope for more weakness in differentials.

"There's room to go lower, refining differentials have recovered but run rates are low (in Europe). There's a fair amount of stock, so there's no rush to move in," he said.

However Nigeria crude blend, Qua Iboe was valued at the same as Brent plus $1.80 by traders. About nine of the 13 cargoes for August export remained available. Differentials have fallen in line with Qua Iboe levels.

While eight for July cargoes out of 63 planned arestill available on top of the bulk of the 65 August cargoes.

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Source: AllAfrica

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