A rapid improvement to some price offers of Nigerian and Angolan crude oil in recent days left traders wondering whether sellers were too optimistic about a recovery of physical oil prices.
Offers of light sweet Nigerian crude oil by Chevron and Exxon have jumped, including a cargo of Qua Iboe offered at above dated Brent zero, up about $6 from around two weeks ago.
Noting that comparable offers were scarce, traders believed some sellers were capitalizing on a slight improvement to Brent crude prices and optimism for easing economic lockdowns to attempt more ambitious prices.
Announcements of fresh output cuts by Saudi Arabia and Kuwait were seen as a boon to West African crude. But with storage options scarce in key markets, reports of new infections in Germany and South Korea along with no indication of actual sales near the offered Nigerian prices, traders saw differentials still well below dated Brent zero.
“Aside from the May cargo availability, there are quite a few new June cargoes that will have to be placed somewhere,” one trader said.
Freight rates were largely static, but a decrease for routes from West Africa to Europe and China last week to levels not seen since early March has provided relief to sellers.
Prospects for Angolan crude were brighter, with state oil company Sonangol largely making offers to independent Chinese refiners that received larger import quotas for early 2020.
New Chinese export quotas of mostly gasoline, diesel and aviation fuel went exclusively to state refiners.