Angolan crude values under pressure from coronavirus concerns: trade

Angolan crude values are coming under pressure from drastically reduced demand from China as the country contends with a coronavirus outbreak, according to trade sources.

"The demand we are losing there currently is huge... the Chinese market is dying slowly but surely," a trader said.

Chinese buyers make up a significant proportion of the demand for Angolan grades alongside some from elsewhere in the region such as Republic of Congo's Djeno.

Last year China took an average of 67% of Angola's crude exports and 73% of Republic of Congo's, according to data from S&P Global Platts trade flow software cFlow.

"All the Angola/Djeno market will collapse because of [the coronavirus outbreak]," the trader said.

With most February and March deliveries already on their way to China, an impact would be seen on April arrivals, corresponding to crude loading out of West Africa in March, the focus of the current trading cycle.

An impact on differentials was seen in the Platts Market on Close window at the end of last week, with Vitol buying a March-loading cargo of Angola's Dalia from Equinor at a premium to Dated Brent of $1.10/b. The grade had been trading at a premium to Dated Brent above $2/b in the February trading cycle, sources said.

Dalia was assessed at a premium to Dated Brent of 98 cents/b, down 87 cents/b over the course of the week. Angolan crudes were on average down by over 60 cents/b over the course of the week.

Congo's Djeno was assessed at Dated Brent minus $1.35/b at the end of last week, down by 70 cents/b over the course of the week.

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