By Justice Derefaka
Oil prices rise on optimism for a straightforward recovery in fuel demand .
Optimism on Monday had been based on strong growth in U.S. pending home sales, bolstering belief that global fuel demand is rising steadily as major economies reopen after coronavirus lockdowns.
However a looming increase in supply weighed on the market, with Libya’s state oil company flagging progress on talks to resume exports.
In West African crude markets June 29 Nigerian differentials moved upward on recovering European refinery margins, while the Angolan market was starting to see its spot trades slow, as baseload buying finished and many smaller independent refineries eased back on purchasing.
The Angolan trading cycle began with a quick clearing of close to half the August program but the pace has slowed in the past few days, with fewer cargoes exchanging hands to end-users amid bearish factors, including lower refinery margins in Asia.
This has been particularly noticeable with the usual reliable buying from China’s independent refineries, colloquially known as teapots.
“The teapots are very slow this month, as they took too many cargoes in the last few months, so there’s congestion in [the main port of] Shandong, and we’re seeing some of them trying to re-offer cargoes,” said one crude trader. The trader added that a good percentage of the current sold cargoes are also likely to be re-offered, potentially to European refineries seeking heavier grades. Some majors are also targeting Europe because Urals is very strong, so heavy-medium grades such as Dalia might head there.
In Nigeria, differentials on August cargoes have moved steadily upward, as Indian and European buying has increased and the build-up of cheaper prompt cargoes has disappeared. Across West African crude and other long- haul grades, differentials have been boosted due to the inexpensive freight rates, as VLCCs and Suezmax storage plays have been unwound.
Prices are as follows:
(1)Dated Brent =$41.39/ bbl (0.62)
(2)Bonny Light =$41.20/bbl (0.84)
(3)QuaIboe =$41.350 /bbl (0.84)
(4)Forcados =$41.450 /bbl (0.79)
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