A burst of spot activity on the West African market saw a flurry of buying of Nigerian cargoes, after sellers finally cut their offer prices, while more favourable shipping economics added additional support.
Nigerian cargoes have struggled to find buyers in Asia this month, partly because Chinese refiners retreated from the market after a burst of buying in October and early November. High freight rates have been a much bigger deterrent for buyers of West African crude, after VLCC rates rose to a three-year peak last week.
A decline in the benchmark Brent crude price and a dearth of ship bookings has helped bring the rates down sharply to six-week lows, which in turn has given the West African market a boost, one trader said. Exxon and Total were said to be offering January cargoes of Qua Iboe and Bonny Light at around $1.50 to $1.60 a barrel above dated Brent.
Exxon was also said to have sold a cargo of Erha crude, while trading house Mercuria was said to have sold a cargo of Qua Iboe. The Nigerian market has been weighed down in the last few weeks by a large overhang of unsold cargoes. Traders estimated that around 30 cargoes were still left over for loading at the end of December and into early January. By Thursday, the total had dropped to between 20 and 25, traders said.