Nigerian grades weaken on sweet grade oversupply in Atlantic basin

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Buying interest for light sweet Nigerian grades was limited on Tuesday and traders said differentials were falling with the glut of alternative crude grades in the Atlantic basin, Reuters reports.

Asian demand was lacklustre and European refiners were taking more U.S. crude at the moment. Further weighing on prices is the contango structure in oil futures that has been tightening since early May, making floating storage uneconomical.

The award of Nigeria’s Direct Sale Direct Purchase agreements, or crude-for-product swaps, has still not taken place. The contract is supposed to start in July. No allocations have yet been made for Forcados. The first test cargo following repairs was still at the terminal, ship tracking showed.

Traders expect potentially two additional cargoes of Qua Iboe to be added in June following repairs on its main export line. It has been exporting on a smaller alternate line since the end of last year. Around 25 cargoes from the June programme have yet to trade.