Mobil Producing Nigeria Unlimited, a unit of ExxonMobil, will resume shipment of Qua Iboe crude, Nigeria’s largest grade of crude oil in October, three months after the company had declared force majeure on the exports of the grade.
This is coming as oil prices slumped three per cent Tuesday following another gloomy prediction by the International Energy Agency (IEA) on demand growth that suggested that oversupply in the oil market might persist for longer than anticipated.
ExxonMobil had declared the force majeure after it observed a leak caused by what it described as a “system anomaly” during a routine check of its loading facility on July 14, this year.
The cause of the leak was not clear, but the force majeure came just days after a militant group, the Niger Delta Avengers (NDA), claimed to have bombed the company’s 48-inch Qua Iboe crude oil export pipeline on July 11.
But 24 hours after the claim by the militants, the company’s spokesperson, Todd Spitler, debunked the claim, saying “there was no attack on our facilities.”
However, citing industry sources, Reuters reported that the company is offering an October-loading cargo of Qua Iboe crude oil, the first offer since the company declared the force majeure.
It was not clear if the pipeline had been repaired, or if the company expected it to be back on stream in time to load crude in October.
But the cargo is offered for October 8-16 loading at a premium of $1.80 per barrel to dated Brent.
A spokesman for Exxon said the force majeure remained in effect but did not give a timeframe on the resumption of operations.
While ExxonMobil said at the time it declared force majeure that the export terminal was operating, traders said the company did not release a revised loading schedule for the crude exports.
The last ship to load crude at the Qua Iboe terminal was the Ottoman Nobility on July 9.
One of the three other ships scheduled to load the crude had been near the terminal since July 12.
A vessel loads one million barrel of the grade every three to four days, and exports of 250,000 barrels per day aboard eight vessels were scheduled for July.
Before it declared a ceasefire recently, the Avengers had warned that if the company moved forward with repairs “something big…will happen,” and threatened to attack the company’s workers, instead of blowing up its facilities.
Shell-operated Forcados crude oil exports were halted since the Avengers attacked its subsea pipeline in February.
In a related development, oil prices fell tuesday on concerns over increased drilling in the United States and as investors took profits after oil prices rose close to one per cent in the previous session.
While the Brent crude was down $1, or 2 per cent, at $47.32 a barrel, the US West Texas Intermediate crude fell $1.25, or 2.7 per cent, to $45.04.
The IEA, energy adviser to over 26 industrialised countries, said a sharp slowdown in global oil demand growth, coupled with ballooning inventories and rising supply, means the crude market would be oversupplied at least through the first six months of 2017.
IEA’s gloomy forecast came a day after OPEC also predicted oversupply in the oil market in 2017.
IEA’s prediction contrasts with the agency’s last forecast a month ago for supply and demand to be broadly in balance over the rest of this year and for inventories to fall swiftly.
The IEA’s latest comments follow a surprisingly OPEC’s bearish outlook published in the cartel’s monthly Oil Market Report (OMR) on Monday.
Oil traders were quoted as saying that the price falls were an indication that increasing oil drilling activity in the United States was still a concern.
Oil Prices Hold Steady Ahead of Crucial OPEC+ Meeting Amidst Fed Rate Hike Signals
Oil prices maintained their significant gains as traders anticipate the outcome of a crucial OPEC+ meeting on supply while considering signals from the Federal Reserve regarding interest rate policies.
Global benchmark Brent hovered below $82 a barrel, having surged over 2% on Tuesday, while West Texas Intermediate traded under $77.
The OPEC+ meeting, scheduled for Thursday to set policies for 2024, is currently grappling with a dispute over output quotas for some African members.
The recent rise in crude prices is underpinned by a weakening dollar, with a Bloomberg gauge of the US currency reaching its lowest level since August.
Federal Reserve policymakers, including Governor Christopher Waller, have hinted at an impending pause in the series of rate hikes, contributing to the bullish sentiment in oil markets.
A softer dollar enhances the appeal of commodities for international buyers.
Yeap Jun Rong, a market strategist for IG Asia Pte in Singapore, commented on the interplay of factors, stating, “The US dollar was dragged lower on a build-up in dovish expectations, which was very much cheered on by oil prices.”
However, concerns persist about OPEC+’s ability to address the challenges in the oil market effectively.
Despite the recent gains, oil is on track for a consecutive monthly decline due to increased supply from non-OPEC countries, intensifying pressure on the cartel and its allies to consider more significant output cuts.
The International Energy Agency’s earlier assessment indicated a potential return to a global crude surplus in the coming year.
In the US, the American Petroleum Institute reported a 817,000-barrel decline in nationwide inventories last week, potentially marking the first drop in six weeks, pending confirmation from government data.
This development may add support to oil prices and impact the ongoing dynamics in the energy market.
Oil Prices Stabilize as OPEC+ Weighs Deeper Output Cuts Amid Global Supply Concerns
Market Evaluates OPEC+ Decision Amidst Bearish Sentiment and Global Supply Worries
A Relaxed Start to the Week But Much More to Come, OPEC+ Eyed
By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA
It’s been quite a calm start to the week which isn’t entirely surprising given the lack of events on the calendar today. That said, things are expected to pick up with the rest of the week serving up some big economic releases and a hugely important OPEC+ meeting.
All data now, particularly that of the US, is being looked at through the prism of what it will mean for the final central bank meeting of the year and the new projections it’ll be accompanied by.
Since the last meeting, the data has been encouraging and we’ll get another batch before the Fed meets on 13 December. This week we’ll get the October PCE inflation data – the Fed’s preferred measure – as well as third quarter GDP, ISM manufacturing and jobless claims.
Outside of the US, we’ll get flash HICP inflation data for the eurozone, PMIs from China, CPI figures for Australia and a rate decision from the RBNZ. On top of all that, there’s a plethora of central bank speakers making appearances which will keep us on our toes.
BoE Governor Bailey got the week off to a start on that front, pushing back against expectations for rate cuts from Q2, claiming he doesn’t expect any for the “foreseeable future”. A vague commitment as ever but all we can expect from policymakers for now. There’s still a way to go and as Bailey highlighted, getting from peak to now is likely to be much easier than from here to 2%.
Oil choppy ahead of Thursday’s OPEC+ meeting
Arguably, the OPEC+ meeting will be the week’s most impactful event. Not just because any decision could have direct consequences for price and therefore inflation but also due to the meeting already being pushed back by four days, so there’s clearly some disagreement within the alliance.
The group has always found a way to get an agreement over the line before, even if that means the biggest producers taking on more of the additional commitments so it’s probably safe to say something similar will be achieved this week. But the question is how far they’ll push it, given the recent trend in oil prices and increasing concerns around global growth next year.
Gold eyeing record highs?
Gold has got the week off to a strong start, up around half a percent and hitting a six-month high. It just about managed to end last week above the psychologically challenging $2,000 level – where it’s repeatedly been pushed back from over the last month – and it seems that has propelled it on today.
We’re still seeing some push back though but this break has been backed by softer US data in recent weeks and less hawkish commentary from the Fed. That may be the difference this time around and enable it to look up towards record highs, only a few percent above where it currently finds itself.
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