24 Hours Across Africa Business Finance News

Nigeria: Nigerian oil rising again due to Asian demand

The shale oil fever emanating from the US is not an illness but the new oil that snuffed out the light from other different grades of oil, including the that of the Nigerian oil from American shores and also putting it under pressure in Europe also.

Recently, the demand for Nigerian oil pouring in from Indonesia and India has helped in lifting the price indication for two of Nigeria’s top grades to  near five-year high based on trading and shipping data. Many believe that because the Indian and Indonesian economies are growing, the decent demand for Nigeria’s oil exists since the European buyers would have further reduced the market.

 

However, European refiners are also beginning to bargain tough taking jabs at higher Nigerian prices. In a statement recorded by a trader, he claims that the market was flooded by “a sea of cheap U.S. oil.”

Currently, CPC oil “costs 50 cents less a barrel compared to the prices being asked for Nigerian, given the freight costs and market structure. Sellers of Nigerian crude are still learning to live with the surge in U.S. shale output, which has turned the United States into the world’s top crude producer and dampened demand for imports in what had been a reliable market for Nigeria.

The Past 10 years has been quite a sad one for the Nigerian since the U.S. scaled back buying,” Crude exports to the US dipped to 5.6 Million barrels in January 2019 from the former 36.4 Million barrels as at January 2019.

 

After Washington lifted a four-decade ban on exports of U.S. oil in 2015, shipments to Europe hit an all-time high of 25 million barrels in March 2019 from just 2 million barrels in February 2016, Refinitiv Eikon data showed.

This affected the Nigerian market.

U.S. oil is also heading to India, where it is increasingly competing with Nigerian crude. Indian Oil Corp, the country’s top refiner, signed its first annual deal to buy U.S. oil in February, paying about $1.5 billion for 60,000 barrels a day up to March 2020.

Despite the pressure from U.S. barrels, Nigerian exports to Europe, India and Indonesia have held generally steady so far.

 

“Nigerian is facing stiff competition almost everywhere,” a trading source said. “Sooner or later Nigerian oil is going to need to expand into new markets.”