Indications emerged yesterday that the sale of Nigeria crude oil in the international market is currently facing challenges due to surging production of United States shale crude , which experts say has similar geological properties .
According to loading programmes compiled by Bloomberg, about 25 out of 60 Nigerian cargoes scheduled for October export remain unsold , while trading will switch to November shipments next week when new programmes are released .
Another factor said to be impacting negatively on the country ’s crude sales is the stoppage of crude imports from Nigeria by the US , which used to be the highest importer of Nigeria ’s crude .
Also , some other traditional buyers of the country’s crude, such as Taiwan’s CPC Corp. , have turned to American grades .
Similarly other trading partners such as India are said to have, in recent times, reduced the volume of crude they import from Nigeria .
This development is coming on the heels of reports that two of the world ’s biggest oil companies , BP and Vitol Group , are stepping up buying and selling Nigeria ’s crude at the same time as a new regional swaps market has emerged , as merchants seek new ways to eke out profits in a tough trading environment .
Over the past six sessions , BP bought eight cargoes , including four Qua Iboe , for loading from mid - October to early -November. There will be a total of nine shipments of Qua Iboe in October ,” the report stated .
Bloomberg said its data reveals that , over the past week, BP bought 7 . 6MMbbl of Nigerian crude from Vitol Group on a pricing window run by S&P Global Platts , doubling the entire activity of the past seven years.
Bloomberg sources with knowledge of derivatives said associated swaps market had taken hold over the past two months , with as many as 8 MMbbl transacted .
The sudden spurt in activity has surprised many participants in a West African market where cargoes are typically transacted privately .
It comes at a time when oil traders are struggling to make money in challenging markets. BP made a rare and unusual loss in oil trading in the second quarter as it was wrong- footed by wild gyrations in U . S. markets.
According to Bloomberg, the cash -settled swaps have attracted interest from oil majors and trading houses, with contracts equivalent to 5 to 8 MMbbl changing hands since trading began two months ago , according to estimates from people involved in that market .
“ As many as eight companies bought and sold the derivatives ” , they said . BP and Vitol were both said to have declined comment on the issue.
The swaps used to hedge or speculate on prices are based on a basket of four Nigerian grades , namely Qua Iboe , Bonny Light , Forcados and Bonga , which are among the largest export grades from the country .
The derivatives allow a buyer to exchange a fixed price for a floating one published by Platts . That means a bidder might profit if Platts assesses that the West African market has strengthened.
Under normal circumstances , Nigeria is said to make shipments of the four grades flow at a rate of about 700,000 to 1 MMbpd , the loading programmes compiled by Bloomberg revealed .
According to loading programmes compiled by Bloomberg, about 25 out of 60 Nigerian cargoes scheduled for October export remain unsold , while trading will switch to November shipments next week when new programmes are released .
Another factor said to be impacting negatively on the country ’s crude sales is the stoppage of crude imports from Nigeria by the US , which used to be the highest importer of Nigeria ’s crude .
Also , some other traditional buyers of the country’s crude, such as Taiwan’s CPC Corp. , have turned to American grades .
Similarly other trading partners such as India are said to have, in recent times, reduced the volume of crude they import from Nigeria .
This development is coming on the heels of reports that two of the world ’s biggest oil companies , BP and Vitol Group , are stepping up buying and selling Nigeria ’s crude at the same time as a new regional swaps market has emerged , as merchants seek new ways to eke out profits in a tough trading environment .
Over the past six sessions , BP bought eight cargoes , including four Qua Iboe , for loading from mid - October to early -November. There will be a total of nine shipments of Qua Iboe in October ,” the report stated .
Bloomberg said its data reveals that , over the past week, BP bought 7 . 6MMbbl of Nigerian crude from Vitol Group on a pricing window run by S&P Global Platts , doubling the entire activity of the past seven years.
Bloomberg sources with knowledge of derivatives said associated swaps market had taken hold over the past two months , with as many as 8 MMbbl transacted .
The sudden spurt in activity has surprised many participants in a West African market where cargoes are typically transacted privately .
It comes at a time when oil traders are struggling to make money in challenging markets. BP made a rare and unusual loss in oil trading in the second quarter as it was wrong- footed by wild gyrations in U . S. markets.
According to Bloomberg, the cash -settled swaps have attracted interest from oil majors and trading houses, with contracts equivalent to 5 to 8 MMbbl changing hands since trading began two months ago , according to estimates from people involved in that market .
“ As many as eight companies bought and sold the derivatives ” , they said . BP and Vitol were both said to have declined comment on the issue.
The swaps used to hedge or speculate on prices are based on a basket of four Nigerian grades , namely Qua Iboe , Bonny Light , Forcados and Bonga , which are among the largest export grades from the country .
The derivatives allow a buyer to exchange a fixed price for a floating one published by Platts . That means a bidder might profit if Platts assesses that the West African market has strengthened.
Under normal circumstances , Nigeria is said to make shipments of the four grades flow at a rate of about 700,000 to 1 MMbpd , the loading programmes compiled by Bloomberg revealed .
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