India and the United States have slashed their imports of Nigerian crude oil by 43 per cent and 53 per cent, respectively, translating to a loss of at least N88bn in earnings, the latest report from the Nigerian National Petroleum Corporation has shown.
India, which became the single largest buyer of Nigerian crude in 2013 after the US, reduced its imports from Nigeria in May this year as it bought 7.74 million barrels, down from 13.51 million barrels in April; 12.51 million barrels in March and 12.70 million barrels in February.
The Asian country had in January imported 16.29 million barrels of Nigerian crude, its highest monthly level this year, the NNPC data showed.
The US, whose imports of Nigerian crude rose by 577.8 per cent in the first quarter of this year compared to the same period of 2015, reduced its import by 5.77 million barrels in May from 10.13 million barrels in the previous month.
In February, the US bought as much as 12.12 million barrels from Nigeria, making it the second largest buyer of the country’s crude after India.
Using a conservative price of $40 per barrel and N197/$ official exchange rate in May, the decrease of 11.14 million barrels in the two countries’ imports of Nigerian crude amounts to N87.9bn.
Global benchmark, Brent crude, had on May 26 hit $50 for the first time in 2016.
The Editorial Director, European and African Oil, Platts, Joel Hanley, in an interview with our correspondent on the sidelines of the Platts’ Lagos Oil Forum, said India “can go anywhere else to buy if the price is right.”
He, however, said, “Nigeria has priced itself to a level where it has regular buyers in India; obviously, there is investment from India that helps that flow. I will say that it is a buyer’s market. India, China and every other buyer have their pick of the grades these days, and that is why differentials are so low. They can pick and choose whatever they want.
“I think right now in this kind of environment, it is about securing a good relationship and a good, reliable trade flow. Trust is so important. And I think if India and Nigeria can focus on that relationship, there shouldn’t be too much threat to that.
“However, if someone comes in at a cheaper price, then I don’t know how long the Indians will stick around because, they, like everyone else, have money to make.”
Three of Nigerian oil grades, Forcados, Qua Iboe and Brass River – have in the past three months been under force majeure – a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances.
A number of India-owned refiners have been actively picking up Malaysian oil cargoes for loading in July and August amid growing uncertainty over the exports of Nigeria’s crude grades, according to regional sweet crude traders.
Following the spate of production disruptions largely caused by the recent surge in militant attacks on oil infrastructure in the Niger Delta that cut the nation’s output to the lowest in almost three decades, exports of the commodity from the country have continued to take a serious beating.
Nigeria relies heavily on earning from oil exports, and the recent production disruptions came as an additional headache for an economy that already suffers from the sharp drop in oil prices since 2014.
Weak demand for Nigerian crude oil has caused the number of ships without cargoes to rise to levels not seen in recent times.
As a result, the cost of sending crude oil cargoes from West Africa to Northwest Europe on Suezmaxes has dropped to the lowest level in over 14 years, Platts data has shown.
The continued force majeure on the three grades has substantially reduced the demand for Suezmaxes in the region in recent months, and caused WAF tonnage list to swell to levels rarely seen by veteran market participants.
Suezmaxes are medium to large-sized ships with a deadweight tonnage between 120,000 and 200,000. They are the largest marine vessels that meet the restrictions of the Suez Canal, and are capable of transiting the canal in a laden condition.
According to one shipbroker’s position list, there were 32 ships available prior to the start of the current fixing window, versus a three-month average of 14.8 ships. There were also 29 ships free of cargo, which could make WAF fixing window.
The number of ships means that each cargo that is shown to multiple owners attracts multiple offers and allows charterers to drive freight rates downwards.
Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude
By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA
We’re seeing green flashing across the board on Thursday, with sentiment buoyed by positive signals on Fed rate hikes and China’s Covid response.
While it could be argued that Jerome Powell’s comments on Wednesday were relatively balanced – slower tightening now but rates high for longer – the last year has proven that anticipating the path of inflation even a short period ahead is incredibly difficult. Knowing what the Fed intends to do next is far more valuable than what it thinks it may do 6-12 months down the line.
And anything that is perceived to reduce to possibility of an interest rate recession is going to be a positive for equity markets. The Fed has every opportunity to tighten more in the months ahead if the data doesn’t play ball. What’s far more difficult is undoing the damage caused by moving too fast now with little to no visibility on how impactful past tightening has been.
The signals coming from China also look very positive. While we shouldn’t expect a dramatic shift in policy from the leadership, particularly before the March Congress, any modest softening in its Covid-zero policy will and should be welcomed. The approach has been extremely damaging to growth and confidence and the protests highlight how public opinion towards it is changing.
We shouldn’t be naive to the fact that a move away from the policy won’t be easy and there’ll be plenty of setbacks. But it’s certainly a step in the right direction that, along with the measures announced to revive the property market, could put the economy on a much better path.
A huge few days for oil markets
Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude, another large production cut from OPEC+ this weekend, and China’s evolving Covid stance. There remains considerable uncertainty surrounding all of the above though which will likely ensure prices remain volatile going into the weekend. That could carry more risk than normal if the OPEC+ meeting does go ahead as planned on Sunday and the EU hasn’t agreed to the price cap level by the close of play Friday. The range of possibilities on these two things alone is huge which will make rumours and speculation over the coming day or two all the more impactful.
Gold testing range highs
Gold bulls were particularly happy with Powell’s comments on Wednesday with the yellow metal rallying strongly to trade at the upper end of its recent range. It faces strong resistance around $1,780 though which was a significant level of support in the first half of the year. With so much data to come over the next day or so, it may not prove particularly resilient if traders are given further hope that rates will rise more slowly and peak lower.
Some relief for cryptos
The risk relief rally is coming at just the right time for bitcoin, helping it to recover from the lows to trade around $17,000. This is around the highs of the last few weeks since it settled after its latest plunge. Whether it will be enough to revive interest in the cryptocurrency, I’m not sure. The FTX fallout is continuing to weigh heavily on the space and the prospect of more contagion or scandals is hard to ignore.
Oil Revenue into Foreign Reserve Dropped From $3bn Monthly in 2014 to Zero in 2022
The official foreign exchange receipt from crude oil sales into Nigeria’s official reserves has dried up steadily from above US$3.0 billion monthly in 2014 to an absolute zero dollar today, the Central Bank of Nigeria (CBN) governor, Godwin Emefiele disclosed.
Speaking at the 57th annual bankers’ dinner organized by the Chartered Institute of bankers of Nigeria (CIBN) in Lagos, the CBN governor noted that there has been a significant loss in foreign reserves due to the naira’s struggle and the rise in demand for forex.
He added that the sharp increase in the number of Nigerians who are seeking education in foreign countries particularly the UK has resulted in an unprecedented demand for foreign exchange.
According to him, the number of student visas issued to Nigerians by the UK alone has increased from an annual average of about 8,000 visas as of 2020 to nearly 66,000 in 2022.
Emefiele also lamented about the level of crude oil theft in Nigeria which has significantly affected the country’s oil production. He noted that crude oil theft has adversely impacted the Country’s foreign exchange reserves.
Investors King had earlier reported that Nigeria has lost its coveted position as Africa’s largest oil producer after oil production dropped below the mark of 1 million barrels per day.
Nigeria currently trails Angola, Libya and Algeria to the fourth position.
Meanwhile, on the Naira-4-Dollar scheme which the CBN introduced to boost migrant remittances into the Nigerian economy, the CBN governor noted that the scheme has largely been successful.
“I am happy to note that, so far, the Naira-for-Dollar scheme has been successful in increasing remittance inflows through our registered International Money Transfer Organisation (IMTOs),” he said.
Emefiele also noted that the introduction of the National Domestic Card Scheme (NDCS) will help to reduce the operating cost incurred by commercial banks while using foreign cards.
It could be recalled that the CBN earlier announced that it planned to introduce Nigeria-made transactional cards to replace well-known cards such as Visa and MasterCard.
Crude Oil Gained 2% as U.S. Oil Inventories Dipped Last Week
Crude oil appreciated on Tuesday on signs global supply is declining amid better-than-expected optimism on Chinese economic recovery and a weaker dollar.
But the likelihood that OPEC+ will leave output unchanged at its upcoming meeting limited the gains.
Brent crude futures rose $2.06, or 2.48% to $85.09 per barrel by 1044 GMT. The more active February Brent crude contract rose by 2.02% to $85.95.
U.S. West Texas Intermediate (WTI) crude futures climbed $1.69, or 2.16%, to $79.89.
Support followed expectations of tighter crude supply.
U.S. crude oil stocks dropped by 7.9 million barrels in the week ended Nov. 25, according to market sources citing American Petroleum Institute figures on Tuesday.
Official figures are due from the U.S Energy Information Administration on Wednesday.
And the International Energy Agency expects Russian crude production to be curtailed by some 2 million barrels of oil per day by the end of the first quarter next year, its chief Fatih Birol told Reuters on Tuesday.
On the demand side, further support came from optimism over a demand recovery in China, the world’s largest crude buyer.
China reported fewer COVID-19 infections than on Tuesday, while the market speculated that weekend protests could prompt an easing in travel restrictions.
Guangzhou, a southern city, relaxed COVID prevention rules in several districts on Wednesday.
A fall in the U.S. dollar was also bearish for prices. A weaker greenback makes dollar-denominated oil contracts cheaper for holders of other currencies, and boosts demand.
Fed Chair Jerome Powell is scheduled to speak about the economy and labour market on Wednesday, with investors looking for clues about when the Fed will slow the pace of its aggressive interest rate hikes.
Capping gains, the OPEC+ decision to hold its Dec. 4 meeting virtually signals little likelihood of a policy change, a source with direct knowledge of the matter told Reuters on Wednesday.
“Market fundamentals favour another cut, especially given the uncertainty over China’s COVID situation … Failure to do so risks sparking another selling frenzy,” said Stephen Brennock of oil broker PVM.
News4 weeks ago
Npower News: What You Need to Know Before Taking ‘Work Nation’ Eligibility Test
News4 weeks ago
Npower Introduce ‘Work Nation’ Program For Batch C, Stream 2 Beneficiaries
Travel1 week ago
Nigerians Eligible For Residence Permit in Norway
News2 weeks ago
Npower News: NASIMS Announced “Work Nation’s” Minimum Cut-Off Mark
News3 weeks ago
Npower News: NASIM Provides Requirements Resolution For Failed August Stipend
News2 weeks ago
Npower News: Latest Update On Npower Payment for Beneficiaries
Blockchain3 weeks ago
FG to Train 30,000 Nigerians on Blockchain Technology; Released Link For Registration
News3 weeks ago
Npower Clarifies “Work Nation” Programme, State It is Optional