- Nigeria Struggling to Sell Crude oil as Demand Tumbles
Falling global demand for crude oil amid fast-spreading coronavirus has prevented Nigerian oil traders from finding buyers for Nigerian crude oil in recent weeks.
According to traders that specialised in West Africa’s oil grades, at least 55 Nigerian crude oil cargoes have not been sold as well as half of Angola’s planned shipments for the month of April.
Traders were quoted as saying that by this time, in a normal trading cycle, at least 50 percent of the oil would have been sold.
“The slow sales for April are overlapping with unsold oil for this month. Traders estimate that about 17 per cent of March volumes for Nigeria and Angola haven’t yet been purchased, along with some shipments from smaller producers, including the Republic of Congo, Gabon and Chad,” the report said.
Bloomberg reported that around 70 percent of April-loading cargoes from Nigeria and Angola have yet to find buyers, adding that unsold cargoes would be in competition with millions of barrels that were scheduled for export in March but yet to be purchased.
The report said, “The distances involved in transporting West African crude to Asia mean barrels exported in April likely wouldn’t reach China until May or even early June.
“That means traders need to evaluate what Chinese demand will look like several months in the future. There are tentative signs that China’s economy is picking up, but activities remain muted.
“Demand for crude to be shipped to China has fallen dramatically in recent weeks due to the coronavirus.
“West African flows this month are expected to slump by a third, according to traders of the region’s barrels. On top of that, weak European oil refining margins are depressing purchases.”
On Thursday, OPEC agreed to cut oil production by another 1.5 million barrels per day to support falling oil prices, however, it is uncertain if Moscow would key into a deeper cut given recent comments from the country. Experts have said anything below 1 million barrels cut would not be effective as markets as already priced-in that much.
However, Saudi Arabia led OPEC’s 14 members are waiting for Russia to proceed with the agreed 1.5 million when the current agreement expires this month.