- NUPENG Strike, Refineries’ Closure Caused Products Scarcity
The current hiccups in the supply of petroleum products is due to the recent one-day industrial action by the Nigeria Union of Petroleum and Natural Gas Workers and the shutdown of the nation’s refineries, the Nigerian National Petroleum Corporation has said.
Many Nigerians had complained of kerosene and diesel scarcity, with some Abuja motorists on Sunday forming long queues at filling stations.
Two out of the country’s three refineries were completely dormant in November 2016.
Explaining why there had been some problems with products’ supply across the country, the Group General Manager, Group Public Affairs Division, NNPC, Mr. Ndu Ughamadu, told our correspondent on Sunday that things were already improving as the situation was being addressed by the corporation.
He said, “We issued a statement on Friday that one of the implications of the one-day warning strike by NUPENG was that there was no loading from various depots nationwide and that created a slight gap. Loading resumed immediately after the strike was called off and you know if tanker drivers don’t load in a day, the implication is that there may be hiccups here and there. But things are normalising.
“Secondly, the three refineries were down for a couple of weeks and they resumed production about a fortnight ago. They are producing enough diesel now in addition to what we are importing to complement indigenous production; likewise kerosene.
“Many filling stations are now selling kerosene, unlike what we had some 10 days ago, when the stations were not dispensing because the local refineries were not pumping the product. But right now, the three refineries have resumed the production of kerosene and many filling stations have started getting products and are dispensing.”
Meanwhile, the price of Nigeria’s largest crude oil export grade, Qua Iboe, has been slashed in a bid to woo buyers as many cargoes for February loading programme remain unsold.
The country’s oil differentials fell to their lowest in more than a year on Friday as surplus cargoes struggled to find outlets in a market oversupplied with light crude oil, according to Reuters.
Despite an Indian tender absorbing several Nigerian oil grades, around 25 February loading cargoes were still looking for homes less than a week before the next loading programme was due.
Sellers slashed premiums for Qua Iboe to as low as 50 cents per barrel versus dated Brent, with traded values expected below that. Brent crude, the global oil benchmark, was trading around $55.45 per barrel.
After the cuts, Oando and Trafigura managed to sell Qua Iboe cargoes for mid- and end-February loading, respectively. Litasco and Total purchased them at prices that traders said were below 50 cent premiums.
The unreliability of loading plans, with Qua Iboe exports delayed due to strike action late last year, also made buyers less keen to take it.
Bonny Light offers were scarce, but traders said its value was also under pressure along with most of Nigeria’s export programme.
Gold Gained Ahead of Joe Biden Inauguration 2021
Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.
The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.
He said, “The key factor appears to be the (U.S.) currency.”
As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.
Also, the effectiveness of the vaccines can not be ascertained until wider rollout.
Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.
Crude Oil Holds Steady Above $55 Per Barrel on Tuesday
Brent Crude oil, against which Nigerian crude oil is priced, rose from $54.46 per barrel on Monday to $55.27 per barrel as of 9:03 am Nigerian time on Tuesday.
Last week, Brent crude oil rose to 11 months high of $57.38 per barrel before pulling back on rising COVID-19 cases and lockdowns in key global economies like the United Kingdom, Euro-Area, China, etc.
While OPEC has left 2021 oil demand unchanged and President-elect Joe Biden has announced a $1.9 trillion stimulus package, experts are saying the rising number of new cases of COVID-19 amid poor vaccine distribution could drag on growth and demand for oil in 2021.
On Friday, Dan Yergin, vice-chairman at IHS Markit, said in addition to the stimulus package “There are two other things that are going with it … one is of course, vaccinations — in the sense that eventually this crisis is going to end, and maybe by the spring, lockdowns will be over.”
“The other thing is what Saudi Arabia did. This is the third time Saudi Arabia has made a sudden change in policy in less than a year, and this one was to announce (the) 1 million barrel a day cut — partly because they are worried about the impact of the surge in virus that’s occurring,” he said.
Also, the stimulus being injected into the United States economy could spur huge Shale production and disrupt OPEC and allies’ efforts at balancing the global oil market in 2021.
Crude Oil Pulled Back Despite Joe Biden Stimulus
Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.
Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.
On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.
OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”
“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”
Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.
“The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.
Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.
But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.
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