By Michael Eboh

Nigeria’s economy faces significant risks in the days ahead, as the country is currently having difficulties getting buyers for its crude oil in the international market, even as the price of its various oil grades have been on a downward trend over the last couple of months.

Data obtained from global energy information providers, revealed that Nigeria is currently recording supply glut in the sales of its crude, as buyers seem to prefer other competing grades from other countries.

Analysts are of the view that unless an improvement is recorded in the days and weeks ahead, the Nigerian economy would be plunged into a financial quagmire, as it would be starved of funds to fund its budget and manage the affairs of the country.

Specifically, a Reuters data indicated that Nigeria had been only able to get buyers for 22 of its 62 December 2015 loading cargoes, leaving around 40 cargoes of nearly every grade of its crude still unsold.

The data said that Qua Iboe was better supported, having cleared most of its December loading cargoes, while other grades, including Forcados, Bonny Light, and Escravos were under substantial pressure.

However, in Angola, Nigeria’s fierce competitor, Reuters said there were still at least eight cargoes from the December programme looking for buyers, including Pazflor and CLOV.

Platts, on the other hand, said Nigerian crude oil market remained under pressure, as many grades have lost around $1 per barrel in value since the start of October, especially as an abundance of sweet crude and high freight rates have failed to excite interest from refinery buyers.

The loss of value was attributed to a number of factors — pressure from high freight rates, competing Mediterranean and North Sea grades and general weakness in refinery margins, which have improved over the past week but not enough to counteract the glut of sweet crude.

The report quoted traders as saying that Nigerian grades account for the bulk of the estimated 65 million barrels or so still unsold from November and December West African (WAF) crude programmes.

“There is a big overhang, with such cheap Urals and Azeri (Light in Europe) for instance, European refineries can take closer grades and that is clearly affecting WAF grades,” one European refinery trader said.

Reuters also said that sellers of Nigeria’s oil were forced to cut differentials again, as around two thirds of the December export cargoes remained available, and was expected to be joined by the January exports this week.

One oil trader said: “Every crude oil grade is available, and you even have the choice of when it is going to load. You have equity holders in a rush to sell what they have.”

However, some traders are of the view that refinery margins remained positive still, with gasoline demand in Nigeria itself helping to support European and United States’ refining margins, and buyers in California and Asia also keen to import more gasoline.

As a result of the glut, prices of Nigeria’s crude oil grades took a hit, as Qua Iboe was assessed last week by Platts, at Dated Brent plus $0.20 per barrel, the lowest since January 13, and down from Dated Brent plus $1.25 per barrel at the start of October.

Escravos, on the other hand, was assessed at Dated Brent minus $0.15 per barrel, its lowest value since April 17, 2009, when it was assessed at Dated Brent minus $0.175 per barrel.

Bonny Light and Forcados, also premium Nigerian grades, were down $1 and 90 cents per barrel, respectively, since the beginning of October, with the latter at Dated Brent plus $0.20 per barrel, the lowest since mid-July.

Bonga, which has dropped 90 cents per barrel since the beginning of October to Dated Brent plus $0.10 per barrel was offered by Vitol earlier last week, in the Platts Market on Close assessment process, without attracting interest even as an offer for an early December cargo dropped to Dated Brent minus $0.15 per barrel last Wednesday.

Other Platts-assessed Nigerian grades – Agbami, Akpo, Brass River, Erha and Usan, have also weakened. Naphtha-rich grades Agbami and Akpo are now both a $1 per barrel discount to Dated Brent.

Brent, the benchmark crude oil grade, was trading around $44.51 per barrels over the weekend.

However, the reports sated that an easing in freight rates out of Africa should also help spur buying interest in Europe and the United States, adding that with Mediterranean and North Sea oil also under pressure, and oversupplied, the fight for buyers could yet cause more pain for oil producers
http://www.vanguardngr.com/2015/11/economic-woes-heighten-as-buyers-shun-nigerian-crude/

As long as we keep practicing this system of government, we will continue to move in the negative direction. True federalism is the answer but we know the parasitic region that is always against it..

Charity begins at home... This is what happens when you refuse to put your home in order... By having a full refining capacity for all grades of PMS for your local consumption and even entire West African needs! But instead chose to propp up foreign refineries and keep them afloat! May the glut quadruple IJN.
Lalasticlala FP

Great news!!!!

Anything to hasten the disintegration of the bloody union. No oil, no nigeria

Not good

This morning news:
Nigeria suffers 1.4 million job loses
Naira falls to 241 per dollar
Now this?..i don't think nigeria would last at this pace of bad news

Opin aye.... Uwa mmebi

Start exploring other natural resources Nigeria is blessed we have them in abundant lets leave the IPOB with there oil they can secess with it if they want or die with it for all I care

apc is really an economic bokoharam

In Phyno's voice "o nwebeghi ihe ifu".

Am still observing this change

Our oil has turned to blood oil and rightly so, with the increased suffering of the masses and gnashing of teeth just to get by many in this nation...no end in sight

Abeg oo make una no buy crude from Nigeria till disamalgammation

Wahai.

TruthHurts1:
Stand alone in your stupidity. You've been confronted with clear and pressing evidence that everything is going downhill fast but instead of turning to reason and logic you choose to embrace emotional hype and your stupid "E go better" mentality. "E go better" without evidence of an actual plan to make things better is a sign of retarded mental ability.

This nigga is pained, can someone give him a satchet of ibuprofen?

When an illiterate rules, the people suffers. .
The dullard has finally demarket Nigeria totally. .
Bad news after bad news is all we hear this days..

"We blame Jonathan and the last administration for their financial recklessness" - PassingShot

"There are some IPOD youths sabotaging this government, they shall all fail, God bless my president" - omenka

"sai Buhari!!!, wailers will always wail " - Beremx


www.nairaland.com/attachments/2186280_buhari2blaugh1_jpegc35d9ea4e30142f9302718e17f58f220

Diversify this shittty economy; Agric, Tin, Limestone, Metal ore, etc.
Each state has one thing or the other her land is good for but we have visionless and lazy governors who depend solely on handouts from Abuja at month end.

It was very painful to watch Ajimobi talk about 3rd bail-out fund at a time when talks should be intense on how to look away from FG money and grow each state's IGR.

The economy is really going down...even my job is now under threat due to low patronage of our products over the past few months.

We told them that he's an economic assassin, but they claimed his integrity will block loopholes.

We told them that he's corrupt just like his fellow croonies, but they claimed he never stole a dime.

We told them he's old, dull and slow, but they said they preferred a dullàrd that created Western Germany and President Mitchell's to a PhD holder that transformed the Agricultural sector of the economy.

We told them he doesn't have the moral standard, will and the technological knowhow to tackle corruption, but they claimed even witch hunting is fighting corruption.

We told them he's full of lies and deciet, but they hoped on the mirage NGN5,000 salary for the jobless and one meal pa day for their kids.

We told them that since he knew nothing about fuel subsidy, then he knows nothing about the petroleum industry/sector of the Nigerian economy but they claimed he'll stabilize world oil price and reduce PMS price to NGN40 per litre.

We told them he has no respect for the rule of law, but they claimed the judiciary was corrupt.

We told them his government is usually marked with heavy job losses and too harsh economic policies but they said they preferred to be jobless in a change government than to be gainfully employed in a Transformation government.

We told them he is not as humble as he looks but they said he had only NGN1million and 150 cows.

We told them that he's too old to govern, they claimed our youths are wasted generations.

We told them he doesn't have a certificate, they said he can use his NEPA bill.

We told them he's vindictive, but they said as far as they are concerned, he can employ all his family members, relatives and well wishers into his cabinet, even if they have no formal education, as long as they deliver.

We told them he's an enemy of democracy, they claimed they prefer his autocracy to the Nigerian Democracy.

We told them he's not humble but only a pretender, they said he'll sell off the presidential jets in order to cut cost of governance.

We told them he doesn't care about the Nigerian citizens, but they claimed he belongs to everybody and belongs to nobody, even though his appointments were mainly for the north, he embarks on fruitless journeys and speaks only to BBC Hausa.

We told them he supported Boko Haram, they told us that even if they found him in a meeting with Shekau and co, that wouldn't stop them from voting him.

We asked for any tangible thing he's done for the country after staying away from government for so long, they claimed it didn't matter.

We told him to get up from honeymoon and hit the ground running, but they called us wailers..

Finally, we told them he's a scam, but they shouted Sai Baba!

Behold Nigerians, here is your much desired change!

The oil should become totally useless...perharps the King of the North will then call for a referendum

Things have already gone too bad.
Our belt tightening since june this year is almost cutting off breach.
How much longrr are we going to continue like this?

We have the capacity to consume all of the crude in Nigeria but first we must build refineries close to where the oil is in the Niger Delta.

Validated:
At this rate, Naira on free fall, falling oil prices, inability to sell oil, Biafra agitation, Boko Haram moves, Governors inability to pay salaries, etc. I am sure that someone would soon call for CONFAB report. Except we continue to deceive ourselves, Nigeria's future lies ONLY on the CONFAB report. Whether we continue to massage the or masturbate around, the problem of structural imbalance will continue until we wake up.

The saying goes thus, "No matter how long you have travelled on the wrong road, the only way you can get to your destination is to stop and return to the right road". Nigeria has been travelling the wrong road in the past 55 years, the earlier we receive common sense and reverse our folly, the better.

Naira can not fall, it has been fixed.

When there is cheap ISIS oil available . screenshot from bbc website

Truth234:


Naira can not fall, it has been fixed.

Insanity is doing same thing all over and expect positive change. Why are you deceiving yourselves (FG & CBN).

Take a scenario: Assume you produce bread and FIX the price at N100. However, your buyers say they can only pay N75. How long are you going to hold on That is where we are in Nigeria today. Someone FIXED Dollar at N197 but the market is selling it at N241 a gap of 44% or 22% gap.
It is only a foolish economist that would tell you that there is no problem with this.

Nigeria is gone.

Validated:


Insanity is doing same thing all over and expect positive change. Why are you deceiving yourselves (FG & CBN).

Take a scenario: Assume you produce bread and FIX the price at N100. However, your buyers say they can only pay N75. How long are you going to hold on That is where we are in Nigeria today. Someone FIXED Dollar at N197 but the market is selling it at N241 a gap of 44% or 22% gap.
It is only a foolish economist that would tell you that there is no problem with this.

You still don't understand, the price at parallel market is always different. Not only in Nigeria across the world, the same thing with banks, they all add spread.

Listen no one is saying there is no issue at hand but saying Naira will fall is wrong, if that decision caused us been delisted from JPMorgan emerging market bond. Why now?

It should remain fixed until there is economically viable diversification strategy.

Adeosun has a lot to do... I hope she has the experience to make quick and fast decision in her economic policies to bring this country back on track.
The way people are becoming unemployed this days is alarming....if something is not done fast we might just go down like Greece.

Truth234:


You still don't understand, the price at parallel market is always different. Not only in Nigeria across the world, the same thing with banks, they all add spread.

Listen no one is saying there is no issue at hand but saying Naira will fall is wrong, if that decision caused us been delisted from JPMorgan emerging market bond. Why now?

It should remain fixed until there is economically viable diversification strategy.

What does fixed Naira mean to the man with five children and no job?
What does a fixed Naira contribute to a farmer that needs fertilizers and implement, most of which are imported?
How does fixing Naira help the importation cost of critical raw materials for ailing industries?
Are you aware that some of the economic indices have gone SOUTHWARDS due to these archaic policies?
Have you quantified the implecation of importing refined products as we fixed our Naira?

in a free economy, you do not need to fix exchange rates. Have you thought of fixing stock prices on the NSE to avoid stock from depreciation? This measure is crude and not sustainable. At the rate things are going, you would soon find out that this economy havecrept into recession with it associated hyper and galloping inflation.