* Qua Iboe crude differential slumps to multi-year low
* Nigeria expected to cut official selling prices
* Weak demand, lack of storage weighs on market
LONDON, March 18 (Reuters) - A glut of unsold, high quality
Nigerian crude has built up because of the coronavirus
outbreak's impact on demand and ample alternative supplies,
putting extreme downward pressure on prices.
Globally, the oil market LCOc1 has lost around half its
value this month as the coronavirus has led to a collapse in
demand.
At the same time, supply is growing as major producers are
pumping flat out to gain market share after Moscow refused to
back deeper production cuts at a meeting of the Organization of
the Petroleum Exporting Countries and its OPEC+ allies.
Nigeria, which produces some of the easiest-to-refine crude
that typically commands a premium, has 30 or more unsold
April-loading cargoes, traders say, equal to 30 million barrels
or 30 percent of daily world demand.
The Nigerian National Petroleum Corporation (NNPC) last week
put the number as high as 50.
Demand has dropped as nations take unprecedented measures to
limit the spread of the virus, cutting fuel demand. A lack of
options for storage, as well as rising freight costs have also
deterred buyers.
"It's a very large overhang," said a trader of Nigerian
crude, who asked not to be named. "It can be the best price and
margin in the world, but there is no storage for crude and
product as demand collapses and shipping is going through the
roof."
One trader expected differentials to go lower. Nigeria's
largest crude stream, Qua Iboe, valued at a premium of $3.00 a
barrel to benchmark dated Brent in December, was offered at
dated Brent minus 70 cents this week, two traders said.
That would be the lowest in many years. Qua Iboe BFO-QUA
was last valued at parity with dated Brent in 2005, according to
Refinitiv Eikon data.
NORTH SEA ALSO WEAKER
A lack of demand has also depressed North Sea crude
differentials, although companies say they are not struggling to
sell.
"We've not had any issues," one North Sea trader said.
The differential for Forties crude BFO-FOT , the largest
crude stream underpinning the dated Brent benchmark, has fallen
to dated Brent minus 75 cents, the lowest since December 2018
according to Refinitiv data.
The May loading programmes for Nigerian crude will emerge in
the coming days and add another 50 cargoes or 50 million barrels
to the already ample supplies.
Given the overhang, traders predict Nigeria will cut its
official selling prices (OSPs) for April crude, which are
expected imminently.
There is no sign of companies in Nigeria, Angola or the
North Sea restraining production because of lower demand - if
anything, they are maximising output to try to raise cash, trade
sources say.
"At $30 a barrel they just want money," one said.