The international oil benchmark, Brent crude, extended its gains on Wednesday, rising to above $66 per barrel.
Brent, against which Nigerian crude oil is priced, gained $1.69 to settle at $66.74 as of 4.30 pm Nigerian time. It plunged to around $60 per barrel early this month.
Outages at North Sea oilfields have helped put competing Nigerian oil on pace to arrive in Europe at the highest levels in seven months in June, according to Refinitiv Eikon data and traders.
Nigeria is set to export about 905,000 barrels per day to the continent this month, the most since a roughly five-year high of about one million bpd in November, Reuters reported on Wednesday.
Norwegian and UK offshore fields in the North Sea normally provide a steady supply of lighter crude to refineries feeding northern Europe’s major economies and are traditionally more competitive than Nigerian grades due to their proximity.
But planned maintenance on Norway’s Ekofisk oilfields this month slashed exports to just one cargo from the usual 10 to 15. Flotta, another of the 12 North Sea fields, closed for repairs over two weeks in late May.
“Nigerian grades are normally middle-distillate-rich and with Ekofisk having undergone maintenance, Nigeria is meeting European demand for this type of crude,” Ehsan Ul-Haq, lead analyst for oil research and forecasts at Refinitiv, was quoted as saying.
Supply of the five North Sea crude grades that underpin the dated Brent benchmark is set to fall to around 720,000 bpd in June, from 948,000 bpd the month before.
The contamination of a pipeline carrying Russian Urals crude in April interrupted flows to central and eastern Europe for a month and left stocks in need of replenishment.
Higher volumes to Europe have provided an unexpected boom, with Nigerian exports to the United States on the wane for a decade due to increased US shale oil production, and demand relatively steady in Nigeria’s key markets, India and Indonesia.
“(Europe) always tends to act as the clearing house at lower value than the East,” one trader selling Nigerian crude said.
Though European petrol margins were said to have been middling and especially poor among southern European refiners, several factors might mesh in coming months to support Nigerian differentials, which stand near multi-year highs.
Traders said the possibility of a permanent shutdown to the fire-stricken Philadelphia Energy Solutions refinery in the city, though it was a consistent importer of Nigerian crude, would increase demand for petrol refined in Europe.
Egina, heavy sweet crude from a new offshore field, was said to have proved consistently popular among refiners in northwest Europe.
“Exports of the grade primarily go to Europe, specifically the Netherlands and France, which combined took around 155,000 bpd in May, or 83 per cent of the grade’s exports,” said Mercedes McKay, analyst at energy consultancy FGE.