Govt clears oil cargoes with help from open arbs

September 12, 2015 7:56 AM

But with Chinese buyers holding back amid refinery run cuts, planned maintenance and a shaky economic growth outlook, Angola also had to take action.

Oil tankers await to offload fuel at the shore of Lagos, File Photo. REUTERS/Akintunde Akinleye

A spate of last-minute buying cleared out much of the October Angolan crude oil cargoes just before the next month's programme emerged, but only after sellers discounted heavily.

Chinese traders returned to the spot market late in the week, but open arbitrage to the United States and Europe aided enormously in a difficult environment for West Africa crude.

"The freight (to Europe) is very cheap ... and all people are trying to delay maintenance to enjoy the good margins," one trader said.

Angola had been shielded somewhat in recent months by its Asian customers from the dire picture faced by Nigeria, which had to slash official selling prices to clear its cargoes.

"Angola priced to sell," one trader said.

The recent narrowing of Brent's premium to Dubai crude also spurred Chinese and India buying, with Reliance making some October loading bookings as well.

Relief for West Africa's crude producers could arrive as a result of the low prices throughout 2015; the International Energy Agency said it expected the low oil prices to force non-OPEC oil producers, notably the United States, to cut output by the steepest rate in more than two decades next year, helping to balance the market.

But also on Friday, investment bank Goldman Sachs slashed its forecast for oil prices, citing global oversupply and worries about top energy consumer China.

It said crude oil prices could fall as low as $20 a barrel, although this was not its "base case".