Rising U.S. Oil Exports Threaten Nigeria, Others

• Rising U.S. Oil Exports Threaten Nigeria, Others

The recent surge in U.S crude exports to Asia region is expected to weigh on exports from Nigeria and other West African countries as competition intensifies, according to traders.

A report by S&P Global Platts showed Nigerian crude struggled with clearing in recent weeks as offers were too high to lure European refineries that are already suffering from poor refinery margins on naphtha and petrol.

“What is more worrying is a structural change in the supply of US crude to Asia. It seems like more Asian buyers are increasingly terming US crude,” a crude oil trader said.

While the quick price correction of Nigerian grades and narrow Brent-Dubai Exchange of Futures for Swaps spread has aided several Nigerian grades such as Agbami, Qua Iboe and Akpo to find homes in Southeast Asia, market sources said the narrow EFS would not be enough to buoy the April programme.

“Looking at the WTI/Dubai and the WTI/Brent spreads, WAF will have to compete with US grades going to the East,” one market source said.

“Arbitrage economics remain highly favourable for more US crude purchases. The latest OPEC cut seems to be keeping the Dubai price complex relatively expensive,” a senior official at Seoul-based Korea Petroleum Association said.

The same is said of Angolan grades such as Girassol, Kissanje and Cabinda.

Angolan grades performed well in the March trading cycle due to increased import from Chinese refiners prior to the Chinese New Year.

However, trading sources had increasingly said the April trading cycle would look different. Some traders said April would only be supportive for selected Angolan crudes going into China, as Eastern buyers would be more focused on which grades were more desired at home.

“Heavy grades will be supportive, but light ones such as Cabinda and Girassol will be under pressure,” a trader said.

Brent crude, against which Nigerian crude is measured, rose above $67 a barrel last week.