Gasoline demand on downward spiral as African countries go into lockdown
Demand destruction for gasoline caused by the coronavirus pandemic is set to intensify as more countries in Africa become subject to curfews and lockdowns, trading sources said.
West Africa, in particular, is a key outlet for European supplies, and this region historically imports more gasoline when prices start to slide, using the opportunity to top up inventories.
But with parts of Nigeria, going into lockdown, demand for the road fuel is expected to dissipate.
“Vehicular movement has been severely restricted. There will only be demand for power generation via diesel and gasoline generators,” a Nigeria-based trader said.
Africa had recently emerged as the last home for European gasoline.
This is another setback for Europe’s refineries, which are key exporters of gasoline.
European gasoline prices have plunged to record lows following the outbreak.
S&P Global Platts assessed Northwest European premium unleaded gasoline barges at a record low of $159.75/mt on March 23. Since then prices have recovered slightly, rising to $194.50/mt as on Monday. Prices were heard to be at similar levels as of Tuesday afternoon.
West Africa has had ample stocks following a pick-up in activity, offering some paper thin support for European gasoline exports. However, with dwindling storage space and demand, the interest has dried up.
“West Africa are not buying anymore, they had been importing a lot. They have run out of space. Demand is also slowly going down,” a source said.
The leading consumer in West Africa of road fuels is Nigeria, typically using around 1 million- 1.25 million mt of gasoline a month.
Earlier this week, state-owned Nigerian National Petroleum Corp. said the country had adequate stocks of gasoline to last for over 60 days.
Nigeria, which produces a little over 2 million b/d of oil, imports almost all its domestically consumed gasoline due to the poor performance of the four state-owned refineries.
Two weeks ago, the Nigerian government slashed its domestic pump price of gasoline by 10% following a sharp drop in global crude prices in the past month.
Nigeria, Africa’s top oil producer, had been under pressure to slash domestic pump prices following a sharp drop in global crude prices in the past month.
The pandemic is now starting to spread faster in Africa, with 3,544 confirmed cases recorded in 39 out of 54 countries on the continent, according to data from the World Health Organization.
Nigeria, Africa’s biggest oil producer, has recorded 111 cases of coronavirus, with one death, according to government figures.