A contango in Brent oil futures relieved some of the pressure on sellers to offload West African cargoes, traders said on Tuesday, but a big supply of unsold vessels kept differentials depressed.
A contango in the market, with prices higher for later delivery than for more prompt purchase, encourages sellers to store crude in the hope of fetching higher prices in later months.
The contango for August over September was around $1.13 by 1547 GMT. The contango structure lasts right through until December.
In 2009, the last time there was a significant contango, large volumes of West African oil went into floating storage.
Around 30 of 65 cargoes for August loading were unsold on Tuesday, with the start of the September loading programme due out by the end of this week.
Traders said the current market structure would give sellers some breathing space, but that floating storage would be limited.
“I’m not convinced we’re going to see floating storage as a strategic play yet, rather short-term storage as prompt sellers are forced to float crude and deliver into later requirements,”
a trader said.
NIGERIA
Qua Iboe and Bonny Light were assessed at dated Brent plus $1-$1.20 a barrel, though offers were at a premium of around $1.70.
ANGOLA
Around six to eight cargoes were available including two CLOV grade vessels and a Palanca. The September loading programme is expected to be released on Wednesday.
ASIAN TENDERS
IOC issued a tender for September-loading cargoes with part one on Tuesday, part two on Wednesday and the results on Thursday.
Reuters
