African Crude Oil Trading Muted Amid Refinery Maintenance and Easing Chinese Demand

African crude oil trading remains sluggish as the market grapples with the ongoing refinery maintenance season and easing Chinese demand. With 5-10 Nigerian and around 20 Angolan cargoes still unsold for June loading, sellers are hoping for an uptick in sales as refineries come back online.

Why this matters: The slowdown in African crude oil trading has significant implications for the global energy market, as it can impact the supply and pricing of oil worldwide. Furthermore, the decline inChinese demand could be a harbinger of a broader economic slowdown, which could have far-reaching consequences for the global economy.

The muted trading activity has left 30 June-loading Nigerian cargoes without buyers, while Angola's state oil company Sonangol failed to attract interest for a spot cargo of Dalia crude at a discount of 60 cents to dated Brent on Wednesday. Equinor also offered a mid-June loading cargo of Angolan Pazflor at dated Brent minus 95 cents per barrel.

Compounding the challenges, Chinese buyers are easing their purchases of West African crude as the monthly trading cycle continues. This slowdown in Chinese demand comes amid concerns over the country's economic recovery, with recent data showing softer demand in the world's largest crude importer.

In February, Chinese consumer inflation rose marginally, benefiting from increased spending during the Lunar New Year holiday. However, producer price inflation shrank more than expected during the same period. Crude oil imports in China climbed 5.1% in the first two months of 2024 compared to the previous year but were weaker than the preceding months.

China has set an economic growth target of around 5% for 2024, which, if achieved, would likely boost fuel consumption. However, experts caution that reaching this target may prove more challenging than in 2023. The country's demand outlook remains a key factor in the global oil market.

Despite the current market lull, a potential decline in oil prices is limited by escalating geopolitical tensions over the Israel-Palestine conflict and the ongoing Russia-Ukraine war. As of Monday, March 11, 2024, international benchmark Brent crude traded at $81.97 per barrel, a 0.13% decline from the previous session's closing price of $82.08. American benchmark West Texas Intermediate (WTI) traded at $77.81 per barrel, a 0.26% fall from the prior session's close of $78.01.

As refinery maintenance season reaches its peak and begins to subside, African crude oil sellers remain hopeful for a resurgence in demand. The coming weeks will be crucial in determining the trajectory of the market, with eyes firmly fixed on Chinese economic indicators and geopolitical developments that could sway global oil prices.

Key Takeaways

• African crude oil trading is slow due to refinery maintenance and easing Chinese demand.
• 30 Nigerian and 20 Angolan cargoes remain unsold for June loading.
• Chinese demand is slowing amid concerns over economic recovery.
• Geopolitical tensions limit potential decline in oil prices.
• Refinery maintenance season's end may boost demand for African crude oil.