W. Africa Crude-Asia demand muted, but China buyers show interest in June Angolan barrels
Differentials for both Nigerian and Angolan held steady on Tuesday, as holidays across Asia muted demand, but traders said Chinese buyers were starting to snap up barrels to feed their refineries once the key maintenance season is over.
* Between five and seven May-loading Nigerian cargoes still had yet to find homes, while trade in June barrels was slow, traders said.
* Qua Iboe was offered at premiums of around $1.50-1.60 a barrel to dated Brent, but with unfavourable arbitrages both east and west and weak refining margins in Asia, buyers were unwilling to step up.
* Sonangol was still offering all the same cargoes, including Girassol, and prices were unchanged, sources said.
* May-loading barrels from both Angola and Nigeria had proven slower to clear, given the extent of the shutdowns for maintenance in China over the second quarter.
* Six Chinese plants set to be fully shut down in May and June process around 1.09 million barrels per day (bpd), equal to roughly 10 percent of China’s average monthly crude runs, Reuters calculations based on refinery rates from China’s statistics bureau showed.
* But with most turnarounds scheduled to end over the course of next month, roughly two-thirds of the 43 cargoes in the June-loading Angolan programme, already the smallest for nearly 12 years, have cleared, traders said.
* The market is currently facing the double headwind of the biggest premium of Brent crude to Dubai DUB-1M-EFS since early 2016 and weak Asian refining margins. Although the spread softened to around $4.20 a barrel on Tuesday, from above $4.60 late last week, traders said this was not enough to suggest a dramatic pickup in flows east any time soon.
* Brent-linked grades are also struggling to move west, as U.S. crude is trading at a discount of around $6 a barrel, its lowest so far this year.
* Higher oil prices are set to boost trade surpluses in the Gulf over the next 18 months but economies will grow only moderately because of austerity policies, a quarterly Reuters poll of private economists shows.
* U.S. crude stockpiles were seen building last week while refined product inventories were seen declining, a preliminary Reuters poll showed on Monday.
BP held out the prospect of a first dividend increase since 2014 on Tuesday, after first-quarter profits beat forecasts thanks to rising oil and gas prices and production.
Source: Reuters (Reporting by Libby George Editing by Susan Fenton)