LONDON, Dec 5 (Reuters) – High freight rates, weak Asian refining margins and a tender by an Indian state refiner kept buyers at bay in the West African market on Wednesday.
Asian gasoline margins have hit their lowest in seven years, against a backdrop of vast supply in the region, making it uneconomical to process the fuel.
Slow demand from Chinese refiners that have more than enough oil in storage, along with expensive freight have created a backlog of unsold cargoes.
Traders said the Angolan market still has around 17 cargoes of unsold January cargoes available, out of a total of 43 in the final loading programme.
The forward market is in contango, which in theory would favour storing and shipping oil, but the structure simply is not deep enough at the moment to make either of these options particularly economical, two traders said.
The dated Brent forward market is in a contango of around 85 cents a barrel, down from over $2 at the start of November.
The Nigerian market has suffered the most from freight rates, which for a VLCC sailing east from West Africa are at the highest in three years.
Offers for big grades such as Qua Iboe and Bonny Light have stagnated between $1.65 and $1.75 a barrel above dated Brent, their highest since September.
*India’s IOC issued a tender for Feb. 1-10 loading that closed on Wednesday.
*Indonesia’s Pertamina is seeking between 950,000 and 1.9 million barrels of light sweet crude for delivery in early February in a tender that closed on Tuesday. Traders said the identity of the winner was not immediately clear.
U.S. President Donald Trump on Wednesday called on the Organization of the Petroleum Exporting Countries and its allies not to cut oil production next year, saying it would trigger higher oil prices worldwide.
* Saudi Arabia sought to persuade Russia on Wednesday to cut oil production substantially with OPEC next year in an attempt to arrest a decline in the price of crude and prevent another global glut. (Reporting by Amanda Cooper; Editing by Susan Fenton) ))