Nigerian oil has suffered its slowest sales of the year in August, traders said, as U.S. exports of competing light, sweet grades flood traditional markets in Europe and Asia.
Despite this, European refiners still fall over themselves over Nigeria’s Egina crude oil because of it quality and suitability for the refineries and its high yields.
The new group managing director of Nigerian National Petroleum Corporation NNPC, Mele Kyari of has however stated that in spite of the threats Nigeria is still going ahead to realise her dream of producing three million barrels per day in the nearest future.
He said there would be investments by stakeholders that would make the anticipated 40 billion barrels reserved feasible
According to Reuters, the changes illustrate how U.S. President Donald Trump’s strategy for “energy dominance” is reshaping oil markets worldwide, as U.S. oil exports surged 260,000 barrels per day in June to a monthly record of 3.16 million bpd.
Crude from Africa’s top exporter has largely been pushed out of the U.S. market in the last decade due to booming domestic output. Exports to the United States slid to zero for three weeks in July, the U.S. Energy Information Administration said.
But now shale oil from the U.S. Permian basin is pouring ever more into traditional strongholds for Nigerian oil in Western Europe, India and Indonesia.
Both Nigeria and the United States are big producers of the kind of light, sweet grades that are ideal for refining into gasoline.
According to IHS Markit, Europe has imported around 46% of Nigeria’s oil since the beginning of 2019, India nearly 18%, and the rest of Asia about another 10%.
“They’re facing bigger competition from the U.S., and in the last few weeks, U.S. exports have really picked up,” one major buyer of West African crude told Reuters.
As many as forty cargoes for export in August were still in need of buyers when Nigeria began publishing its preliminary programme for September exports beginning on Jul. 18.
It was the largest oversupply so far in 2019, with about 25 cargoes the monthly norm.
Though the excess has begun to clear, in part due to energy majors absorbing much of the excess into their own refining systems, the discounts sellers made to attract interest has lowered price expectations for Nigerian exports for September.
“They’ve got a big volume still remaining, and though the number of cargoes left for August is in the single digits, it seems to be taking longer and longer to clear lately. It’s not a pretty picture,” the crude buyer said.
A fire and explosion on June 21 which shut down the Philadelphia Energy Solutions (PES) refinery – a consistent buyer of Nigerian oil – only added to the marketing challenge.
Up to two month’s worth of light sweet oil, or about 20 million barrels, from West Africa and the North Sea which had been scheduled to arrive there were rerouted elsewhere at steep discount
The report added that despite a slight glut in light sweet and medium grades in the Atlantic Basin, distillate-rich crude grades -especially those in West Africa and the Mediterranean – are finding support from strong distillate refinery margins.
Egina oil has been clearing well recently, with almost all the August programme sold and September-loading barrels also seeing strong buying interest. Egina loadings in August and September were expected to average 214,516 barrels per day and 200,000 barrels per day, respectively, according to Platts estimates.
Also production from the field has been stable, which also accounts for its good demand.
