Beside lingering decline in crude oil prices, which has greatly affected Nigeria’s revenue from crude oil exports, the country may have also lost buyers of the essential commodity.

Specifically, about 35 million barrels of the country’s crude oil remained unsold at the international market as at December 2014.

Also, the country’s crude oil production dropped by 17,300 barrels per day from 1.919 million barrel per day it recorded in November to 1.902 million barrels per day in the month under review.

Unfortunately, Asian countries, which Nigeria turned to when the United States stopped buying the country’s crude oil due to the shale boom, now prefer Angolan grades.

The Organisation of Petroleum Exporting Countries (OPEC), which made this disclosure in its December report released yesterday, attributed this development to weak crude oil demand at the international market.

According to OPEC, low European refinery demand amid weak gasoline and naphtha margins has put pressure on West African crudes, most especially Nigerian light sweet crude. “Asian refining margins dropped slightly during December on the back of losses seen in the gasoline and middle distillates cracks as the strong seasonal demand within the region was partially outweighed by increasing supplies from several countries in the region,” it added.

The cartel said that Angolan grades have predominantly sold out, supported by robust Chinese buying, though values have fallen for heavier Angolan grades, as they compete with cheaper Mideast Gulf supplies.

The report disclosed that the price of Nigerian Bonny Light dropped by $16.80 or 21.2 per cent in December to $62.53/b, accumulating about $49 in losses since June.

The cartel said that crude oil buyers are taking advantage of the price decline and current supply glut by buying and storing of products with the hope of selling at higher prices later in the year.

It stated: “The widening contango in the crude oil market is also reviving interest in Asia for the hiring of ships to store crude at sea, taking advantage of lower prices and the current supply glut. Besides Brent, the contango in the Asian sour crude market has also recently widened, reflecting an oversupplied market and an expected drop in demand for crude ahead of the region’s refinery maintenance season.”

OPEC said that the United States, which used to be Nigeria’s biggest crude oil buyer, has increased its export, providing an outlet for additional production that would otherwise have added to the country’s stockpiles.

It disclosed: “US crude exports soared to 487,000 bpd in November, up from 360,270 bpd in October. In July, US crude exports topped 400,000 bpd, the highest since the 1950s. Mexico’s state-owned Pemex requested permission from the US Department of Commerce to import up to 100,000 bpd of light crude and condensate from the US. In return, Mexico will export heavy Mexican crudes to be processed at US refineries. The prompt ICE Brent-Nymex WTI spread stood at $3.89/b on average in December.”

OPEC forecasts that demand for the group’s oil will drop to 28.78 million barrels per day (bpd) in 2015, down by 140,000 bpd from its previous figure and the lowest since 2004.

OPEC also trimmed the rate of growth in non-OPEC supply partly due to a slowdown in the U.S. shale boom.

Lamenting the continuous crude oil price decline, OPEC said that the OPEC Reference Basket (ORB) ended December down by 21 per cent to its lowest value since May 2009.

It stated: “In the second half of 2014, the ORB lost about half its value amid an imbalance in oil market supply/demand fundamentals. In December, the ORB dropped $16.11 to $59.46/b and its yearly value was down $9.58 to $96.29/b.

“Oil futures tumbled sharply by more than a hefty 20 per cent to their lowest values in more than five-and-a-half years amid an enduring bearish market environment, particularly from the supply side that has surrounded the oil market for six months now. The ICE Brent contract plunged $16.36 m-o-m to $63.27/b, ending 2014 at an average of $99.51/b.

“The Nymex WTI contract lost $16.52 to $59.29/b, while its yearly value dropped to $93/b. Meanwhile, speculative bets on a rebound in oil prices rose sharply over the month, particularly for ICE Brent, as crude oil prices reached a five-year low.”

•Excerpted from a Guardian report. Photo shows OPEC Chairman, Diezani Alison-Madueke.

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