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Anxiety as US exports rise shift buyers’ attention away from Nigerian crude

Since this week, several crude cargoes of Nigerian crude have been hovering on the international market without buyers in sight due to supply glut caused by rising glut of light sweet crude from the United States.

According to the Energy Information Administration (EIA), the statistics arm of the US Energy Department, crude oil exports in the first half of 2017 increased by more than 300,000 bpd from the first half of 2016, reaching a record high of 900,000 bpd.

It said following the removal of restrictions on exporting US crude oil in December 2015, total volumes of crude oil exports and the number of destinations for those exports both increased. The US exported crude oil to 27 countries in the first half of 2017 compared with 19 countries in the first half of 2016.

Reports say tenders to buy oil from companies in India and Indonesia helped to absorb some excess, but there were roughly 30 unsold Nigerian cargoes and a handful from Angola.

Analysts say if the trend continues, running of the current 2017 budget may begin to have issues of funding as Nigeria’s bulk income comes from oil sales.

Already, US crude oil is flooding into Asia and may continue to do so as the arbitrage window that was initially created by Hurricane Harvey remains open, even though the disruption from the costliest storm to hit the Gulf of Mexico has faded, a columnist for Reuters, Clyde Russell, wrote on Monday.

A record amount of US crude is scheduled to arrive in Asia in November, according to vessel-tracking and port data compiled by Thomson Reuters Oil Research and Forecasts.

The data show 19.7 million barrels of US oil is due to arrive across Asia in November, equivalent to about 657,000 barrels per day.

This is more than a 50 per cent jump on the 427,000 bpd that was offloaded in Asia in October, and also above the previous record-high month for US crude shipments to Asia of 541,000 bpd from June.

While Qua Iboe, Nigeria’s largest export grade, was offered at dated Brent plus $1.30, buyers said traded levels were likely to be lower because of an overall excess of light sweet oil.

There were also at least five cargoes of Forcados left, though several were partial cargoes.

Bonny Light, which had struggled with loading delays owing to pipeline issues, was offered at a premium of closer to $1 a barrel above dated Brent. There were several cargoes of Agbami and Bonga left.