Strong gasoline crack help stem Nigeria crude weakness

Strong refining margins for gasoline and a slight retreat in freight rates helped prevent further weakness in Nigerian crude oil differentials, traders said on Tuesday.

Around 50 million barrels of Nigerian oil for November and December export have yet to find buyers with only around 10 days until crude due to be exported in January comes to market.

This large surplus of oil has helped to push the differential of benchmark Qua Iboe oil to its lowest since January, and near a multi-year low reached in December.

But strong gasoline margins are offering an element of support for light sweet Nigerian oil and may help prevent further weakness, traders said.

“Runs are up and freight rates are slightly lower, so there’s no crisis (in differentials),” a trader said.

Eurobob’s crack was at around $13 per barrel compared to around $5.40 in mid October.

But tempering prospects of a recovery, refiners are looking to reduce crude inventories in the run up to year-end accounting, limiting their appetite to make purchases, one trader said.

Nigeria’s Qua Iboe grade was seen quoted on Platts at parity to dated Brent.

But traders said that while some cargoes for more prompt delivery would go at these levels, others for later dates would be closer to a 50 cent premium.

Bonny Light was heard to be trading in line with Qua Iboe.

A late October loading Escravos owned by Total is floating, a trader said. He added that it would likely go into the French major’s refining system.

Unipec was heard to have taken a cargo of Akpo, while Pertamina took a cargo of Qua Iboe from Trafigura in a spot trade.