Refined oil product arrivals into Nigeria and other West African countries in December so far are 1.19 million metric tonnes as of Wednesday, compared with 1.21 million mt in the whole of November, S&P Global Platts trade flow software cFlow showed.
Based on fixtures seen by Platts, of these arrivals, 1.02 million mt were thought to be petrol, 60,000 mt jet fuel, and 67,000 mt diesel, and 37,000 mt of ultra-low sulfur diesel.
According to the report, petrol buying interest has sustained from West Africa, particularly from Nigeria, as the country’s February general election approaches.
Most of the 1.02 million mt of petrol is expected to arrive in Lagos, supporting comments from the Nigerian National Petroleum Corporation, which said that the country currently has around 2.6 billion litres of petrol stock, enough to cover 52 days of consumption.
The availability of petrol from Northwest Europe is limited however, with not much selling interest, as the contango in Europe is leading to participants storing products in the Amsterdam-Rotterdam-Antwerp hub.
The West African diesel market came under pressure from local financing problems.
Traders said that lower crude oil prices meant Nigeria’s foreign-exchange earnings were lower, in turn limiting the amount of dollars available for letters of credit.
The LCs are issued by banks as a form of guaranteeing payment of imported products, requiring sufficient amounts of dollars to assure payments for oil products.
“There is no availability of dollars to confirm [and execute] trades. So, there is a lot of demand but there aren’t the tools to service it,” a trader active in the region was quoted as saying on Tuesday.
Demand from private companies was also said to be diminishing as margins were shrinking due to ample supply.
“Premiums have started falling [slightly],” a second trader said. “I [also] expect lower demand due to shrinking margins [as the market is oversupplied],” he added.
In a related development, the Nigerian crude oil market continues to struggle with a fairly large surplus of unsold crude on Wednesday, with around 30 cargoes said to be left over for loading at the end of December and into early January.
Differentials for major grades such as Qua Iboe were last estimated at a premium of around $1.65 a barrel to dated Brent, unchanged from where they have held over the last week or so.