Yemisi Izuora/Ijeoma Agudosi-Agency Report
Nigerian crude values increased as higher refining margins supported by healthy light end and middle distillate cracks boosted the West African crude market, trading sources said.
Sources said activity picked up about two weeks ago once the March term allocations were finalized modestly in the past week and demand for the light sweet grades like Akpo and Agbami was very strong initially.
Qua Iboe was assessed at Dated Brent plus $1.30/barrel on Monday, the highest since November 20, 2014, Platts data showed.
Traders also said recent March stems were traded close to or higher than Dated Brent plus $1.50/b.
Traders said differentials for Nigerian light sweet crude grades such as Akpo and Agbami had risen by more than a $1.30/b from previous trades in February.
Traders further noted the main reason for the jump in prices for Agbami and Akpo was due to buoyant demand caused by widening naphtha crack spreads.
Market sources said Agbami for March had traded between Dated Brent minus $0.70/b and minus $0.40/b, or $1.50/b above the level of the February program.
“Undeniably, the market is improving, especially if you compare it to the levels at which the grades traded for the February program,” a trader said.
“It is specifically the Nigerian light sweet grades which are trading much higher. Margins in Europe are much better and the naphtha crack has improved considerably,” he added.
Traders said there were now approximately 15-20 March Nigerian stems available which is a much shorter overhang than the Nigerian market had experienced recently.
Also, with prompt margins holding well, traders said they expected some prompt demand.
Another supporting factor was Suezmax freight out of West Africa which had actually come off compared with three weeks ago, and this was opening the arbitrage to Europe, encouraging more demand from the Mediterranean and Northwest European refiners.
