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Oil Market Heading Towards Balance – OPEC

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  • Oil Market Heading Towards Balance – OPEC

OPEC Secretary-General Mohammad Barkindo said on Thursday that an overhang in global oil inventories was declining but stockpiles still needed to fall closer to the five-year industry average.

“While it is evident that the market rebalancing is now moving forward and investment specifically in short-cycle projects is returning, it is essential we do not take our eyes off our desired goals.

“We need to see the global stock overhang move closer to its five-year average. We need to see the return of more long-cycle investments,” he told a conference in Paris.

Barkindo’s views were echoed by oil ministers from OPEC members Iraq and Angola, also attending the conference.

Iraqi oil minister Jabar al-Luaibi said production cuts were gradually leading to a long-awaited rebalancing of the market.

The Organisation of the Petroleum Exporting Countries and a number of non-OPEC producers meet on May 25 to discuss extending output curbs that cover the first half of 2017.

The cuts total 1.8 million barrels per day, two-thirds of that from OPEC producers, and are aimed at clearing a supply glut that has depressed oil prices.

Luaibi added that Baghdad will go with the consensus reached by OPEC when the group meets in Vienna next month.

Angola’s oil minister José Maria Botelho de Vasconcelos said he believed the deal would be extended beyond June.

“The market is moving toward rebalancing,” Amin Nasser, chief executive of state oil giant Saudi Aramco, said at the same event. “I see the oil market pointing upward and expect it to continue improving.”

Barkindo said consensus on a decision during OPEC’s next meeting was “gradually building up”.

The International Energy Agency (IEA) said in its latest monthly market report that oil stocks in industrialized countries stood at around 3.06 billion barrels at the end of February, a figure that mostly includes crude and oil products.

The Paris-based IEA said stocks were some 336 million barrels above the five-year average.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd

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The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.

The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.

The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.

The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.

Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.

The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.

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Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins

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Oil Prices Recover from 4 Percent Decline as Joe Biden Wins

Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.

This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.

Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.

On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.

Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”

The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.

There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.

“Either you’re crimping energy demand or consumption behavior.”

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Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020

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Revenue of OPEC Members to Drop to 18 Year Low in 2020

The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.

EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.

If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.

The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.

It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.

It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.

“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”

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