OilBarrelCorbisBarbaraDavidson460Nigerian crudes continued to edge higher despite a lack of activity as news that Libya would not issue September allocations for some grades due to ongoing strikes added support to light sweet crudes in West Africa, sources said Wednesday.
Prior to the news from Libya sentiment was slightly on the bearish side as refining margins remained weak, and not much activity was seen on the spot market. But support from Libya was expected to hold, sources said.
A trader said price support for Nigerian crudes would largely depend on the situation in Libya, citing uncertainty there. “If Libya sorts itself out Nigeria is very long, if it doesn’t, and depending how long it stays disrupted, it should hold,” said the trader.
“But there is a feeling that a lot of traders and refiners have gone long on Nigerian crudes on the back of the disruptions.”
A second trader said falling activity was beginning to put some pressure on the remaining 10 or so cargoes from the September-loading program.
“Things have been trading slowly but [differentials] are steady. Differentials were definitely struggling, especially for earlier cargoes,” he said. He added that there was some extra supply, “especially after the addition of the Bonny September program,” which could weigh on differentials.
However, Libya’s NOC said as a result of the continuation of strikes at some Libyan terminals — Ras Lanuf, Es Sider, Zueitina and Marsa el-Hariga — the company will not be able to “allocate any quantity of crude oil exports from those terminals” throughout September.
Sources said this was expected to encourage further buying of Nigerian light sweet crudes.
Nigeria’s Agbami, which is one of the lightest and sweetest grades produced in West Africa, was assessed at Dated Brent plus $0.80/barrel on Tuesday, its highest level seen since May 13, Platts data showed.
Information from Platts was used in this report.