The Nigerian crude oil market remains under pressure with many grades have lost around $1/b in value since the start of October as an abundance of sweet crude and high freight rates have failed to excite interest from refinery buyers.
With traders also saying Nigerian grades account for the bulk of the estimated 65 million barrels or so still unsold from November and December West African crude programs, flagship Qua Iboe hit a 10-month low weekend with smaller grade Escravos at a 6-1/2 year trough, Platts data showed.
“There is a big overhang, with such cheap Urals and Azeri [Light in Europe] for instance, European refineries can take closer grades and that is clearly affecting WAF grades,” one European refinery trader said.
Qua Iboe was assessed Wednesday at Dated Brent plus $0.20/b, the lowest since January 13 and down from Dated Brent plus $1.25/b at the start of October. Escravos at Dated Brent minus $0.15/b, its lowest value since April 17, 2009, when it was assessed at Dated Brent minus $0.175/b.
Bonny Light and Forcados, also premium Nigerian grades, are down $1.00/b and 90 cents/b, respectively, since the beginning of October, with the latter at Dated Brent plus $0.20/b — the lowest since mid-July.
Bonga — which has dropped 90 cents/b since the beginning of October to Dated Brent plus $0.10/b — was offered by Vitol both Tuesday and Wednesday in the Platts Market on Close assessment process, without attracting interest even as an offer for an early December cargo dropped to Dated Brent minus $0.15/b Wednesday.
Other Platts-assessed Nigerian grades — Agbami, Akpo, Brass River, Erha and Usan — have also weakened. Naphtha-rich grades Agbami and Akpo are now both a $1/b discount to Dated Brent.
The loss of value can be attributed to a number of factors — pressure from high freight rates, competing Mediterranean and North Sea grades and general weakness in refinery margins, which have improved over the past week but not enough to counteract the glut of sweet crude.
Additionally in Europe, Urals’ values are at their lowest levels in more than a year, providing better margins than sweets and, as a result, a number of European refineries have switched