There are reports that about 20 million barrels of Nigerian crude oil for December and January loading has remained unsold by Thursday, according to two traders.
According to Reuters, Angola’s December to January programmes still had as many as five to six cargoes still available.
It stated that these West African crude oil sellers are struggling to find buyers for up to 26 December- and January-loading cargoes due to stiff competition from plentiful and cheaper alternative supplies, traders and analysts told Reuters.
The amount of unsold Nigerian and Angolan crude, analysts say, is a symptom of a wider oil market surplus. It drove selling on the international futures market that pushed Brent crude below $60 per barrel to the lowest since May this week.
Some analysts have suggested that this challenge is a symptom of a wider oil market surplus, which has seen the Brent crude sell below $60 per barrel, the lowest since May this week, the report noted.
Victoria Grabenwoger of analytics firm Kpler said, “The overhang of West African cargoes partly reflects the broader global crude supply surplus emerging in Q1.’’
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.
The report suggests that such large amount of unsold oil is unusual, especially for the current month, given the West African trade cycle is typically closer to two months ahead. Estimates for both countries’ overhang was 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.
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 is struggling to compete with supplies from Argentina and Brazil, two traders said.