Thursday, April 28, 2016

India buys more Nigerian oil amid supply glut

 Oil price rises ahead of OPEC meeting

India says it has absorbed more Nigerian oil as a supply glut continues to affect major oil producers.
Despite the purchase, there were still close to 10 million barrels unsold for May loading.

The Indian refiners made the purchase via tenders.

Less than 10 million barrels of May loading were left for spot trade in May, but Erha programmes had not emerged. Traders said if they did not book ships to load the oil within the week, there could be issues securing vessels in time.

June loadings were at their lowest of the year due to the absence of Erha and Forcaodos.

A compilation of loading programmes for Nigeria’s oil exports has shown the country intends to ship a low amount of crude oil in June.

Nigeria’s initial oil export plan for June showed crude loadings poised to fall to the lowest level so far this year.

The exports, on 52 cargoes, totalled 1.57 million barrels per day (bpd), compared with a revised May programme of 1.6 million bpd aboard 55 cargoes.

The export plans did not include Erha, which is the subject of a disagreement between ExxonMobil and Nigeria’s NNPC.

There has still been no May loading programme issued for the grade.

If Erha export cargoes are issued, it would likely push the June exports above April, the previous 2016 low, when just under 1.60 million bpd were scheduled for export.

Nigeria’s oil production has been hampered by a force majeure on the Forcados stream that has been in place since February.

Nigeria’s NNPC has said repairs on the pipeline that feeds Forcados to the export terminal will take until June.

According to the April OPEC monthly oil market report, the issues pushed Angola’s oil production levels above those of Nigeria.

Despite the country’s diversification efforts, crude oil remains the major income earner for Nigeria.

The sub-nationals in the country heavily depend on revenue from oil sales at the monthly Federation Accounts and Allocation Committee (FAAC) to fund their activities.

The government, led by President Muhammadu Buhari, has said it wants to diversify the economy by boosting agricultural, mineral and other non-energy sectors.

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