W. Africa Crude-Nigeria’s low diffs spur buyer interest

West African crude last week got a boost from renewed interest in Nigerian oil and benchmark prices that were firming for a seventh straight day.

Buying interest firmed for Nigerian crude as differentials remained remarkably low. Qua Iboe, the largest export stream, was holding near its lowest since December 2015.

A rare cargo of Agbami was set to sail for Australia aboard the Cap Philippe, booked by Chevron.

Vitol had also booked the Rio Grande to carry Nigerian crude to the U.S. Atlantic coast, for loading in mid-July.

Still, an excess kept a limit on differentials, even as sellers began offering Qua Iboe and Forcados at larger premiums of 70 to 90 cents per barrel to dated Brent for July loading.

Angolan crude was selling more quickly after Chinese buying re-emerged. July loadings slipped to a 10-month low, but resurgent interest from teapots and others helped Sonangol sell its last cargoes.

India’s HPCL was running a term tender, which closes next week, to buy as much as 4 million barrels of Nigerian crude every three months through March 2018.

OPEC oil output has risen in June by 280,000 barrels per day to a 2017 high, a Reuters survey found, as a further recovery in supply from the Libya and Nigeria, exempt from production cuts, offset strong compliance by their peers.

Libya’s oil production has risen to 1.012 million barrels per day, a Libyan oil industry source told Reuters on Friday, topping 1 million barrels for the first time in four years.

Analysts have cut their forecasts for oil prices this year and next as the prospect of a continued large rise in U.S. production will likely slow OPEC’s efforts to cut its output to help supply match demand, according to a Reuters poll.

Meanwhile the force majeure on exports of Nigeria’s main export crude, Bonny Light by Shell was also lifted last week  .

The company had declared the force majeure on Bonny Light liftings on June 8 following the shutdown of the Trans Niger Pipeline after a sabotage attack on the line by suspected oil thieves.

Bonny Light is produced in Nigeria from Chevron and Shell concessions.

Cargoes are loaded from the Shell-operated Bonny Light terminal, which can accommodate VLCCs. Bonny Light has an API gravity of 35.3 degrees and sulfur content of 0.15%.

The resumption of Bonny Light exports would push Nigeria’s output to more than 2 million b/d, coming on the back of the resumption of deliveries from the Forcados oil terminal in late May after being out for several months.

Oil theft in Nigeria has remained a major headache for both Nigeria and the producers in the area, even as the government has been able to check the activities of militants in the main producing Niger Delta region through peace talks.

Nigerian oil output plummeted to near 30-year lows of around 1.2 million b/d in May 2016 from 2.2 million b/d earlier that year as attacks on oil facilities in the Niger Delta rose at an alarming pace due to resurgent militancy.