Approximately 20 million barrels of Nigerian oil for December and January loading remained unsold on Thursday, according to a Reuters report, quoting two traders.
December and January loading cargoes remain unsold due to stiff competition from plentiful and cheaper alternative supplies.
Analysts say the challenge is a symptom of a wider oil market surplus, driving selling on the international futures market that pushed Brent crude below $60 per barrel to the lowest since May this week, the report noted.
“The overhang of West African cargoes partly reflects the broader global crude supply surplus emerging in Q1,” Reuters quoted Victoria Grabenwoger of analytics firm Kpler.
Angola’s December-January programmes also had as many as five to six cargoes available.
These cargoes have slowed the start of the trading cycle for February cargoes, even though Angola’s loading schedule and term nominations have already been released.
Such a large amount of unsold oil is unusual, especially for the current month, given that the West African trade cycle is typically closer to two months ahead.
Reuters report puts estimates for both countries’ overhang as high as 40 million barrels earlier this week.
“Current market softness appears to be partly seasonal and partly due to shifting buying patterns in response to freight costs and alternative supply options,” said OilX analyst Francisco Gutierrez, adding that Angolan January trade is 20% behind its long-term average pace because the world’s biggest commodities buyer, China, has switched to cheaper, or nearer alternative grades.
Supplies from the Middle East are displacing medium and heavy West African grades in Asia as lowered official selling prices in January and shorter voyages give those grades a competitive edge, the analysts said.
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India’s oil imports from Russia have remained resilient despite tightening Western sanctions, displacing medium-heavy density West African crudes, while light to medium-density West African grades are struggling to compete with supplies from Argentina and Brazil, two traders said.
Nigeria has also been left to market more oil because of reduced imports by the 650,000 barrels-per-day Dangote plant, which will in January undergo maintenance, Kpler’s Grabenwoger said.
