London (Platts)–6 Jul 2016 707 am EDT/1107 GMT
The spread between Angolan oil grades Dalia and Pazflor continued to widen Tuesday as Pazflor traded at a $0.80/b premium over Dalia, the highest premium Pazflor has had over Dalia since S&P Global Platts started assessing the two West African grades in July 2013.
The spread has blown out as a result of subsea works that are due to start in August in the vicinity of the mooring and offloading buoy at the Dalia oil loading terminal.
The work means no VLCCs will be accepted as a second port of call in August, the official Sonangol loading program stated.
“The loading restrictions are a pain, especially for [Asian] buyers, as they need the flexibility to load first or second from these ports rather than being obliged to load there first,” a trader commented on the loading restrictions.
Dalia was heard offered at Dated Brent minus $3.40/b Tuesday while a Pazflor August loading cargo was heard offered at Dated Brent minus $2.50/b.
A buyer of the grades said: “While I believe that Pazflor is lower than the offer at Dated Brent minus $2.40/b, there is no doubt that Pazflor sells higher than Dalia at the moment.”
Another market participant added that “the terminal operator is so inefficient and they only tell us on a monthly basis what is happening, so far all we know, the subsea works could last for just one month or for several months.”
The two grades, which have a similar API gravity and sulfur content, traded at parity from May 1 to June 28.
Pazflor’s highest premium over Dalia before this current hike was $0.38/b on October 2, 2014.
Pazflor typically loads four cargoes of 950,000 barrels a month totaling 3.8 million barrels with the majority of these cargoes going east to China or India while one cargo is often sent north to Europe.
Dalia usually loads seven cargoes of also 950,000 barrels a month amounting to 6.65 million barrels. Dalia typically competes with buyers from similar regions as Pazflor mainly going east to India and China or north to Europe.