A new report has revealed that there is an increasing buildup in West Africa’s crude inventory, as the Coronavirus effect continues to impact negatively on demands from some European countries and China.
The situation is so bad that no buyers have indicated interest for about 70% of oil cargoes that are slated for export from Nigeria and Angola this coming April. In specific terms, there are about 55 Nigerian cargoes and 18 Angolan cargoes without buyers. In addition to these are millions of unsold barrels of crude that were slated for sale this month.
“Most of Nigeria’s April export program is unsold, while about half Angola’s planned shipments for next month have yet to find buyers, according to two traders who specialize in West African grades. They estimate that 55 Nigerian cargoes and 18 Angolan have yet to find buyers.
“The two nations are due to ship almost 100 cargoes next month, meaning the rate of unsold consignments is about 70%. By this time in a normal trading cycle, 50% of the oil should have been sold. The slow sales for April are overlapping with unsold oil for this month.”
The report from Bloomberg, therefore, urged West Africa’s crude traders to begin evaluating the future of oil sales, especially as it relates to exports to China. This is important because even there are indications that the Chinese economy is gradually picking up, the Coronavirus is still very much a threat.
Note that China is Nigeria’s top trade partner, buying up significant volumes of Nigerian crude to power its many factories. Unfortunately, China’s crude demand fell drastically starting from late January, following the initial outbreak of the deadly and highly contagious Coronavirus in Wuhan.
Due to the Coronavirus effect, West Africa’s crude exports in March have been projected to decline by a third. In addition to declining Chinese crude demand, weak European oil refining margins have also been reported to be depressing purchases.