Congolese Djeno crude reaches all-time low as WAF collapse continues

Ongoing pressure across the West African crude market saw differentials for Congolese crude Djeno, among others, reaching fresh all-time lows in the June 26 session, as the struggle to place August-loaders into an oversaturated market continues to pressure values.

Platts, part of S&P Global Energy, assessed differentials for Congolese crude Djeno down $1.015/barrel on the day to a $11.86/b discount to Dated Brent on June 26, a fresh record low since Platts began assessing the grade in 2013.

Other East-facing Angolan crude grades, including Dalia, Pazflor, Hungo were also assessed at their lowest values on record since Platts began assessing each respective grade.

The struggle to place August-loading WAF cargoes amid a large overhang from the previous cycle, little interest from typical Eastern buyers and high volumes of competing grades continues to exert pressure on crude differentials.

"It's been quite bearish this week with the high freight and pressure from Brazil and the Persian Gulf," said a Europe-based WAF crude trader.

Alongside record liquidity seen in the Platts Market on Close sessions over the week, traders had also been reporting offers circulating in the spot market during afternoon trading.

Notably, the June 26 trading session saw over-the-counter offers from sellers including Chinese companies for August-loading cargoes of Dalia, Pazflor, Hungo, Kissanje, Sangos, Agogo and Gindungo.

While offers for specific cargoes had reached levels close to minus $9/b under Dated Brent, little buying interest was heard elicited as the WAF crudes continue to compete with excess availabilities across their typical destinations.

The June 26 Platts Market on Close assessment process also saw TotalEnergies emerging to offer a 920,000-barrel cargo of Djeno loading July 27-28. The cargo had last been seen on offer in the June 23 MOC session, where it had been left outstanding at a $10.90/b discount to Dated Brent.

The offer first emerged in the June 26 MOC session at a $10.75/b discount and was withdrawn before the London close at a $12/b discount without having found a buyer.

"Djeno is basically a grade that goes only to China, if Chinese companies are selling cargoes of other grades, it will be really hard for this grade," said a second trader.

As such, even with falling offer levels heard across the week, "nothing appears to be moving," said a third trader.

"The only positive this week is the return of contango in the CFDs, which allows longer haul WAF to compete better versus short haul Med or North Sea grades, for example," said the third trader. "However, the contango is nowhere near enough to compensate for freight and an excess of supply when the East is focused on cheaper Middle East barrels."