Demand for Nigerian oil "dire" as U.S. competition ramps up

By Noah Browning
LONDON, Aug 9 (Reuters) - Nigerian oil has suffered its
slowest sales of the year in August, traders said, as U.S.
exports of competing light, sweet grades flood traditional
markets in Europe and Asia.
The changes illustrate how U.S. President Donald Trump's
strategy for "energy dominance" is reshaping oil markets
worldwide, as U.S. oil exports surged 260,000 barrels per day in
June to a monthly record of 3.16 million bpd. Crude from Africa's top exporter has largely been pushed out
of the U.S. market in the last decade due to booming domestic
output. Exports to the United States slid to zero for three
weeks in July, the U.S. Energy Information Administration said.
But now shale oil from the U.S. Permian basin is pouring
ever more into traditional strongholds for Nigerian oil in
Western Europe, India and Indonesia.
Both Nigeria and the United States are big producers of the
kind of light, sweet grades that are ideal for refining into
gasoline.
According to IHS Markit, Europe has imported around 46% of
Nigeria's oil since the beginning of 2019, India nearly 18%, and
the rest of Asia about another 10%.
"They're facing bigger competition from the U.S., and in the
last few weeks, U.S. exports have really picked up," one major
buyer of West African crude told Reuters.
As many as forty cargoes for export in August were still in
need of buyers when Nigeria began publishing its preliminary
programme for September exports beginning on Jul. 18.
It was the largest oversupply so far in 2019, with about 25
cargoes the monthly norm.
Though the excess has begun to clear, in part due to energy
majors absorbing much of the excess into their own refining
systems, the discounts sellers made to attract interest has
lowered price expectations for Nigerian exports for September.
"They've got a big volume still remaining, and though the
number of cargoes left for August is in the single digits, it
seems to be taking longer and longer to clear lately. It's not a
pretty picture," the crude buyer said.
A fire and explosion on June 21 which shut down the
Philadelphia Energy Solutions (PES) refinery - a consistent
buyer of Nigerian oil - only added to the marketing challenge.
Up to two month's worth of light sweet oil, or about 20
million barrels, from West Africa and the North Sea which had
been scheduled to arrive there were rerouted elsewhere at steep
discounts, and prices have not since recovered in either region.

"Demand has been dire. (We) need margins to improve quickly
and dramatically," one seller of Nigerian oil said.
Traders said the competition for European demand was helping
drive down offers for similar cargoes elsewhere.
"Imports of U.S. crude into Europe ... (are) obviously
having an impact on sweet demand in other regions."
In a statement in May, the White House hailed U.S. inroads
into far-flung markets "We are exporting more and more energy as
production soars and President Trump negotiates better market
access for our producers," it said.
Mele Kolo Kyari, the new managing director of the Nigerian
National Petroleum Corporation (NNPC), assured Reuters in an
interview this week that buyers would not soon lose interest.
"I think the advantage we've had is the quality of our
crude," he said. "We know (buyers) will come."

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U.S. crude oil exports to India, Indonesia https://tmsnrt.rs/2MHFi8a
U.S. crude oil production https://tmsnrt.rs/2Yxr3di
Differentials for Nigerian Qua Iboe crude oil compared to dated
Brent https://tmsnrt.rs/2YBBNao
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(Additional reporting By Libby George in Abuja; Editing by Jan
Harvey)