Vitol Group BV is offering to sell Nigerian crude oil from a storage terminal in South Africa in what may be a signal that the global supply glut is beginning to ease, Bloomberg reported.
According to Oil Price, Vitol is reportedly offering 4m barrels of Nigeria’s Qua Iboe grade that it has been storing in facilities in Saldanha Bay on the southwestern coast of South Africa. To compare, typical trades are of 1 or 2m barrels each.
The proposed sales offer investors a signal that a glut that crashed prices could be clearing because it shows traders may be emptying out stockpiled supplies. They were able to profit from storing thanks to a pricing structure called contango, in which the glutted market made immediate prices cheapest of all.
Oil traders have already sold more than 10m barrels of crude stored in tankers off the coasts of Asia in what could be seen as the start of the drawdown of the huge oversupply and market tightening following OPEC’s production cut deal.