June 13, 2018 / 3:27 PM / in 9 days

W. Africa Crude-Sellers remain wary as surplus barrels weigh on the market

LONDON, June 13 (Reuters) - Differentials for Nigerian and Angolan crude were unchanged on Wednesday as sellers remained reluctant to offer cargoes into a market already perceived to be fairly heavily oversupplied, traders said.

West African grades are having to compete increasingly fiercely against U.S. and Latin American crudes for market share in Asia. This has created one of the largest surpluses, particularly in Nigerian oil, for several years, traders said this week.

Chinese and Indian buyers are taking increasing amounts of U.S. crude, not least because the discount of U.S. benchmark futures to dated Brent — against which West African grades are pegged — hit its widest in three years late last month.

Reuters trade flows data shows that 320,000 barrels per day (bpd) of U.S. crude will travel to China this month, compared with 280,000 bpd in June last year, which has directly undermined both Nigerian and Angolan flows east.

Iran is facing renewed U.S. sanctions on its oil sector from the United States and a number of major European refiners have already started to work on contingency plans.

One industry source said that some of these plants are testing Angolan grades, which tend to be more sour than the Nigerian crudes, as potential replacements.

STORIES

* Sinopec’s Yangzi refinery received a U.S. Mars crude cargo on June 12, marking the 160,000 bpd refinery’s first U.S. crude purchase, the Chinese company said on Wednesday.

* Chinese chemicals producer Hengli Group has bought its first crude oil cargo from Brazil ahead of the start-up of a new 400,000 bpd refinery in the fourth quarter, two sources with knowledge of the matter said on Wednesday.

The plant is configured to process medium and heavy crude grades from Saudi Arabia as well as Brazilian oil.

* Republic of Congo will open a call for oil licence tenders in September followed by a promotion campaign at an oil conference in South Africa in November, Congo’s hydrocarbons minister and conference organisers said on Wednesday.

* India’s oil imports from Iran surged to about 705,000 bpd in May, their highest level since October 2016, according to data from shipping and industry sources, despite the threat of U.S. sanctions.

NIGERIA

* Shipments of Bonny Light are still subject to force majeure, though traders have said that at least three tankers are due to load the grade this week and next, albeit with at least a two to three days’ delay.

* The Trans Ramos pipeline, which carries Forcados to the coast for export, is still closed for repairs after a leak shut it on April 24, a Shell spokesman said on Wednesday.

* More than half the July-loading Nigerian programme was believed to be available for sale, though a number of cargoes are likely to remain with their current holders, who would then feed them into their own refining systems, a trader said.

* No cargoes were heard to be offered publicly for sale, with sellers wary of putting additional pressure on an already fragile market, several traders said.

ANGOLA

* The August loading programme is likely to emerge in the coming few days.

TENDERS

* Indian Oil Corp issued a tender to buy light sweet crude on Friday last week for delivery Aug. 5-15. The tender is due to be awarded on Thursday. The refiner was believed to have bought 4 million barrels of West African crude earlier in the week. (Reporting by Amanda Cooper Editing by David Goodman) ))

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