Nigeria’s crude oil sales for the month of May are facing significant hurdles as a result of subdued demand from European buyers, signaling a challenging start to the month for one of Africa’s largest oil producers.

Reports from industry insiders suggest that approximately 10 cargoes of Nigeria’s crude oil designated for May loading are still available for purchase.

While this figure represents about a fifth of the country’s total exports for the month, it indicates the sluggish pace at which Nigerian crude is being absorbed by the market.

The slow movement of Nigerian barrels comes against the backdrop of a broader bearish sentiment in the Atlantic Basin crude market.

A surge in U.S. oil exports has weighed down prices, affecting refinery feedstock demand not only in Europe but also in West Africa.

Despite European refineries resuming operations after seasonal maintenance, prices for Nigerian crude as well as other alternatives like Azeri Light and West Texas Intermediate, have struggled to gain traction.

James Davis, director of short-term oil market research at FGE, commented on the situation, noting, “We’ve got much weaker margins so crude demand is taking a hit.”

One of the factors contributing to Nigeria’s lag in crude oil sales is the insistence by sellers on premiums over the Dated Brent benchmark. These premiums, however, proved too high for European refiners, prompting a reassessment of pricing strategies.

Christopher Haines, global crude analyst at Energy Aspects Ltd., explained, “May cargoes were at a premium that didn’t work that well into Europe, but lower offers have seen volumes move.”

While some Nigerian crude grades have become more competitively priced, especially for markets like Asia and the Mediterranean, the overhang of unsold cargoes persists. June and July shipments remain on sale, further complicating the outlook for Nigeria’s oil exports in the coming months.

In contrast, Angola, another major oil-producing nation, has experienced relatively stable sales to China. With less than 10 shipments for June loading seeking buyers out of 37 scheduled, Angola’s medium-to-heavy sweet crude has found more favor with Chinese refiners compared to Nigeria’s lighter output.

As global oil markets remain volatile, Brent crude oil prices edged closer to the $83 per barrel price level following reports of a decline in US crude inventories.

The uptick in prices comes amidst ongoing concerns about supply constraints and rising demand, painting a complex picture for energy markets worldwide.

The latest data from the American Petroleum Institute (API) revealed a notable decrease of 3.1 million barrels in nationwide crude stockpiles for the previous week.

Also, there was a drawdown observed at the critical hub in Cushing, Oklahoma, a key indicator for market analysts tracking US oil inventories.

Investors and traders have been closely monitoring these inventory reports, seeking clues about the supply-demand dynamics in the global oil market.

The decline in US crude inventories has added to the optimism surrounding oil prices, pushing Brent towards the $83 threshold.

The positive sentiment in oil markets is also fueled by anticipation surrounding the upcoming report from the International Energy Agency (IEA).

Market participants are eager to glean insights from the IEA’s assessment, which is expected to shed light on supply-demand balances for the second half of the year.

However, the recent rally in oil prices comes against the backdrop of lingering concerns about inflationary pressures in the United States.

Persistent inflation has raised questions about the strength of demand for commodities like oil, leading to some caution among investors.

Furthermore, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) face their own challenges in navigating the current market dynamics.

The group is grappling with the decision of whether to extend production cuts at their upcoming meeting on June 1. Questions about member compliance with existing output quotas add another layer of complexity to the discussion.

Analysts warn that while the recent decline in US crude inventories is a positive development for oil prices, uncertainties remain.

Vishnu Varathan, Asia head of economics and strategy at Mizuho Bank Ltd. in Singapore, highlighted the potential for “fraught and tense OPEC+ dynamics” as member countries seek to balance their economic interests with market stability.

As oil markets await the IEA report and US inflation data, the path forward for oil prices remains uncertain. Investors will continue to monitor inventory levels, demand trends, and geopolitical developments to gauge the future trajectory of global oil markets.

Oil prices on Monday dipped as the U.S. Federal Reserve officials’ comments showed a cautious approach to interest rate adjustments.

The dip in prices reflects concerns over the outlook for global economic growth and its implications for energy consumption in the world’s largest economy.

Brent crude oil, against which Nigerian oil is priced, slipped by 7 cents or 0.1% to $82.72 per barrel while U.S. West Texas Intermediate crude oil stood at $78.21 per barrel, a 5 cents decline.

Auckland-based independent analyst Tina Teng highlighted that the oil market’s focus has shifted from geopolitical tensions in the Middle East to the broader world economic outlook.

Concerns arose as China’s producer price index (PPI) contracted in April, signaling continued sluggishness in business demand.

Similarly, recent U.S. economic data suggested a slowdown, further dampening market sentiment.

The discussions among Federal Reserve officials regarding the adequacy of current interest rates to stimulate inflation back to the desired 2% level added to market jitters.

While earlier in the week, concerns over supply disruptions stemming from the Israel-Gaza conflict had provided some support to oil prices, the attention has now turned to macroeconomic indicators.

Analysts anticipate that the U.S. central bank will maintain its policy rate at the current level for an extended period, bolstering the dollar.

A stronger dollar typically makes dollar-denominated oil more expensive for investors holding other currencies, thus contributing to downward pressure on oil prices.

Furthermore, signs of weak demand added to the bearish sentiment in the oil market. ANZ analysts noted that U.S. gasoline and distillate inventories increased in the week preceding the start of the U.S. driving season, indicating subdued demand for fuel.

Refiners globally are grappling with declining profits for diesel, driven by increased supplies and lackluster economic activity.

Despite the prevailing challenges, expectations persist that the Organization of the Petroleum Exporting Countries (OPEC) and their allies, collectively known as OPEC+, may extend supply cuts into the second half of the year.

Iraq, the second-largest OPEC producer, expressed commitment to voluntary oil production cuts and emphasized cooperation with member countries to stabilize global oil markets.

However, Iraq’s suggestion that it had fulfilled its voluntary reductions and reluctance to agree to additional cuts proposed by OPEC+ members stirred speculation and uncertainty in the market.

ING analysts pointed out that Iraq’s ability to implement further cuts might be limited, given its previous shortfall in adhering to voluntary reductions.

Meanwhile, in the United States, the oil rig count declined to its lowest level since November, signaling a potential slowdown in domestic oil production.

As oil markets continue to grapple with a complex web of factors influencing supply and demand dynamics, investors and industry stakeholders remain vigilant, closely monitoring developments and adjusting their strategies accordingly in an ever-evolving landscape.