Nigerian disruption raises demand for alternatives
OREANDA-NEWS. May 23, 2016. Sellers of Nigerian crude have raised their offers after output disruptions tightened supplies, but buyers are turning to rival Atlantic basin grades.
Accidents, criminal damage and attacks by armed rebel groups have shut in an estimated 500,000 b/d of Nigerian supply. Bonny Light, Escravos, Forcados and Qua Iboe grades have been affected by the disruptions. Around 250,000 b/d of Qua Iboe is scheduled to be exported in May and June, down from 310,000 b/d originally, and shipments face delays of up to 15 days. Bonny Light and Escravos loadings are taking place at reduced rates, while Forcados remains shut in.
Nigerian crude sellers have increased their offers to try to profit from the tightness. June-loading Qua Iboe is being offered at a \\$2/bl premium to benchmark North Sea Dated, 50?/bl higher than last month. Escravos offers have also risen. But interest in the disrupted grades has been limited.
Regular customers have turned to rival crudes because of the uncertainty surrounding Nigerian loadings. European buyers are taking North Sea crude, which trades on a prompter basis than west African grades, and as a result a flotilla of tankers storing Forties close to the grade's terminal at Hound Point, Scotland, is dispersing.
North Sea crude is drawing further strength from disruptions to Canadian supply, after wildfires shut in up to 1.3mn b/d of production in the province of Alberta. Suncor bought a 1mn bl cargo of Ekofisk for its 130,000 b/d Montreal refinery as a replacement for disrupted supply.
Another crude to have benefited from the supply disruptions is Caspian light sweet BTC Blend. June-loading BTC Blend firmed by 20?/bl relative to North Sea Dated, with cargoes changing hands at premiums of \\$2.30/bl to the benchmark.
Indonesia's Pertamina took regional Asia-Pacific grades in its latest tender to buy July-delivery crude. The state-owned refiner buys on a delivered basis, so the loading risk is borne by the seller. But there are likely to have been fewer offers of Nigerian crude, given the disruptions. India's IOC, the largest single buyer of Nigerian crude in Asia-Pacific, took only Nigerian grades unaffected by the disruptions in its latest tenders, as well as Angolan crude.