West African Oil Booms as Refineries Cash in on High Margins

Source: Reuters 8/2/2017, Location: Africa

Booming refinery profits are helping West African oil producers sell cargoes quickly, aided by a shortage in certain types of crude amid OPEC production cuts and Venezuelan troubles. A fight for sour crude has helped keep Angolan oil in high demand and now, even long-suffering Nigerian grades are finding keen buyers in the United States and Asia as refineries run full steam on strong margins.

"Everything has been so supportive and bullish these past three or four weeks," one trader said, adding that between draws from storage and strong margins, "refiners are buying up ahead of normal timeline to make sure they don't miss out".

U.S. refinery margins rallied to a two-year high on Tuesday, while analysts FGE said Europe's refinery runs were on track for a six-year high for August before Europe's largest oil refinery went into an unplanned shutdown over the weekend. FGE said that amid strong profits, other refineries would pick up much of the slack. A cut in Venezuela's supply of heavy crude to U.S. refiner Phillips 66, in part due to quality problems, is helping to send more Angolan oil west.

A trade source said Phillips 66 bought September Angolan cargoes, with Hungo, Olombendo, Plutonio and CLOV destined for that refiner and others. Nearly 8 million barrels of Angolan oil loaded for the United States and Canada in July, according to Reuters data, the highest in at least a year.

Asian buying, particularly competition between independent "teapot" refiners and Chinese state-run Unipec, is another key support.

Differentials for Angola's Cabinda, at 40 cents per barrel, stand at a three-year high. Girassol, at a 50 cent premium, is also at its highest since 2014, while a whopping two thirds of Angola's September exports sold the same week they emerged.

Angola, while participating in output cuts organised by the Organization of the Petroleum Exporting Countries, is benefitting from lower Saudi exports.

"Angolan grades can replace some fuel-oil-rich crudes from the Middle East," said Ehsan Ul-Haq, director of crude and refined products with consultancy Resource Economist, adding that buyers are keen in part due to strong profits for sulphur-rich fuel oil.

The sour strength is also boosting Nigerian oil, which has a lower sulphur content and produces more fuels such as gasoline. Light crudes suffered because most production additions this year, from U.S. shale, Libya and Nigeria, were light crude. But the sour shortage led some buyers to shift to light oil.

Competition among buyers has boosted offers for Nigeria's Forcados to as much as $1.70 above dated Brent, while offer levels climbed for nearly all other grades. The cargoes are also selling smoothly, in contrast to recent months in which they lingered well after the programmes were issued.

"Some buyers are now managing to switch to lighter crudes - buyers in the United States and China too," another trader said. "Refiners see the margins and run."


Oman >>  5/17/2021 - Tethys Oilís share of the production, before government take, from Blocks 3&4 onshore the Sultanate of Oman amounted in April 2021 to 307,009 barrels ...
South Africa >>  5/13/2021 - Africa Oil Corp. is pleased to announce its financial and operating results for the three months ended March 31, 2021. The Company is also pleased to ...

Trinidad and Tobago >>  5/13/2021 - Touchstone Exploration Inc. reports its operating and financial results for the three months ended March 31, 2021. Selected information is outlined be...
Turkey >>  5/13/2021 - Valeura Energy Inc., an upstream oil and gas company with assets in the Thrace Basin of Turkey, reports its unaudited financial and operating results ...

United Kingdom >>  5/13/2021 - Neptune Energy announces its financial results for the three months ended 31 March 2021. ...
Brazil >>  5/12/2021 - Alvopetro Energy Ltd. announces our first quarter 2021 financial results, formalization of our dividend policy and upcoming plans for a small lot comm...

Related Categories: Camp Building  Cleaning Equipment, Services  Communication  Corrosion Products/Services  Development  Exploration  Food Supplies  General  Labor Services  Land & Leasing  Mine Clearance  Oil & Gas Companies  Production  Service Companies  Skilled Labors  Transportation, 4X4 Trucks  Unskilled Labors  Utility Systems  Waste Disposal  Water Supply Services  Welding Products/Services 

Related Articles: Camp Building  Cleaning Equipment, Services  Communication  Corrosion Products/Services  Development  Exploration  General  Labor Services  Land & Leasing  Mine Clearance  Oil & Gas Companies  Production  Service Companies  Skilled Labors  Transportation, 4X4 Trucks  Utility Systems  Water Supply Services  Welding Products/Services 


Gulf Oil and Gas
Copyright © 2021 Universal Solutions All rights reserved. - Terms of Service - Privacy Policy.