Around 19 million barrels of Nigerian crude oil for November loading are struggling to find buyers as Asian and Europe refiners have either started looking further ahead or turned to closer and increasingly cheaper crude oil grades.
Traders said the surplus cargoes of Nigerian crude oil were slow to clear on Tuesday but Angolan crudes fared better because of patronage by Chinese buyers.
“The outlook for Nigeria is not fantastic,” one trader told Reuters. “Demand has slowed down massively.”
The United States, which had been a keen buyer in recent weeks, is now turning cold on West African grades.
“September and October were the peak arbitrage months,” one trader said of the Africa to United States flow. “There’s been a drop off in the (crude) we’re seeing go to the U.S.”
Chinese buying, along with other Asian tenders, had absorbed more of the December Angolan programme, traders said.
Despite the current setback Nigeria is expected to see some stability and predictability in her crude oil sales in January when lifting contract for the 2015/2016 programme comes to force.
The assurance of an end to the era of overhang comes as the Nigeria National Petroleum Corporation (NNPC) recently opened bid for potential crude term contracts winners.
“The absence of credible buyers has resulted in situations where individuals pick cargoes and they will not know what to do with them and at the end of the month it becomes an overhang; then we have fake supply glut or oversupply that do not exist but which the market reacts to and we have lower values,” said Mele Kyari, Group General Manager, Crude Oil Department of the NNPC.
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