Spot activity on the West African market had been expected to pick up this week as most of the Asian tenders had all been awarded, and the remaining cargoes were seeking homes in Europe, they said.
But the week started off on a slow note, with no trades heard done, even though most traders had been expecting European refiners to start buying more WAF grades this week.
However, traders said that for this to happen, differentials for these light sweet grades would have to come down in order to compete with the relatively weaker light sweet Mediterranean and North Sea grades.
“It is now a completely different market… The momentum has gone,” a trader said, referring to the conclusion of Asian tenders, which he said had helped Nigerian crude differentials remain strong.
Nigerian grade Forcados was assessed Monday at Dated Brent plus $4.38/barrel, a fall of $0.20/b since September 30. This is also the lowest price seen since August 28, Platts data showed.
Forcados is struggling to sell for November, with only two cargoes of out seven heard to have been sold so far, with one going to an oil major and another to Ivory Coast. Forcados is a popular grade in Europe but with a current dearth of European interest, the grade is not selling well.
Traders said the Asian tenders had been supporting firmer levels but that this would now change.
One trader said: “On Nigeria, the levels have been sustained so far due to all the Indian tenders that closed last week. Now suppliers will have to adjust, and a fall will be seen.”
Sources said that in the Med and the North Sea, light sweet crudes such as Azeri Light, Ekofisk and Saharan Blend had come off very sharply in the last two weeks, whereas Nigerian light sweet crudes were still comparatively stronger.
This meant that amid the backdrop of current refining margins, European refiners so far have been largely ignoring Nigerian grades for November and buying cheaper light sweet crudes instead.
“In Europe you could have Azeri Light for much cheaper than Nigerian grades. All European refiners are doing that calculation… which is one reason why you are not seeing European refiners buy much WAF crude at the moment,” said a trader.
Information from Platts was used in this report.