Buyers Snub Nigerian Crude as April Exports Remain Unsold

By Adedapo Adesanya

As Covid-19 continue to impact negatively on the global market, Nigerian crude is struggling to find buyers for its April export as restrictions and cautions regarding the spread of the disease have reduced demand for the commodity.

As a result of this, 55 cargoes from the country are yet to find any buyers due to drop in demand from Chinese and European refineries, major destinations which are also counting their losses.

In a report by Bloomberg on Wednesday, it was reported that Nigeria alongside another member of the Organisation of the Petroleum Exporting Countries (OPEC), Angola have about 70 percent of their April-loading cargoes unsold.

This is because these cargoes are competing against millions of barrels that were meant to be exported for March but did not get any buyers as the coronavirus led to drops in demand with Nigeria not selling to China this month.

According to the report, the distance in transporting West African crude to Asia slated for next month would not get to China until May or June.

“Traders need to evaluate what Chinese demand will look like several months in the future.

“There are tentative signs that China’s economy is picking up, but activity remains muted,” the report stated.

In European refineries, which are destinations for West African cargoes, weak margins are affecting purchases of the commodity while demand for crude has continued to fall due to the virus, which led to government restrictions on travel and gatherings.

Analysts say West African crude in March are expected to fall by over 30 percent, especially as an estimated 55 Nigerian cargoes have not been bought. Meanwhile, Angola has 18 cargoes.

It was disclosed that in a normal trading cycle, 50 percent of the oil would have been sold but with slow sales for April, they are overlapping with unsold oil for this month. As a result, estimates show that about 17 percent of March volumes for both countries haven’t yet been purchased.

The Bloomberg report also said that some shipments from smaller producers including the Republic of Congo, Gabon and Chad have also not found buyers.

This is coming a time when the country is set to review its 2020 budget due to drops in prices which have since worsened as the Brent Crude, the standard futures it places its own against are trading $8 below its $57 per barrel benchmark ($49 per barrel on Friday).