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Gasoline Extends Gains, Oil Slips as Harvey Set for Return Hit

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  • Gasoline Extends Gains, Oil Slips as Harvey Set for Return Hit

Gasoline rose for a seventh session while crude fell as traders braced for prolonged refinery and pipeline outages before a second hit on Texas from Tropical Storm Harvey.

Motor fuel prices advanced as much as 3.3 percent in New York, on its longest run of gains in a year, while U.S. crude extended losses from the lowest close in five weeks. Harvey drifted into the Gulf of Mexico after making landfall Friday and is set to regain strength before crashing ashore Wednesday on the Texas-Louisiana border. Motiva Enterprises LLC’s Port Arthur refinery, the nation’s biggest, is said to be shutting because of severe flooding.

Oil in New York has lost almost 8 percent this month as investors weigh rising U.S. supply against production cuts from some members of the Organization of Petroleum Exporting Countries and its allies. Harvey, the strongest storm to hit the nation since 2004, has halted about 20 percent of America’s refining capacity, damping crude demand in the world’s biggest user.

“There’s no surprise that we’re seeing a reaction in the gasoline market given refiners are out of action,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “It’s less disruptive to oil because the geographic spread of operations is much broader, and there is also the huge stockpiles.”

Gasoline for September delivery, which expires Thursday, climbed as much as 5.89 cents to $1.8422 a gallon on the New York Mercantile Exchange. Prices added 4.2 percent to close at $1.7833 on Tuesday, the highest close in more than two years. The more-active October contract rose 2.65 cents to $1.6284 at 1:21 p.m. in Hong Kong.

West Texas Intermediate for October delivery dropped 11 cents to $46.33 a barrel on the New York Mercantile Exchange after losing 13 cents to $46.44 Tuesday, the lowest close since July 24. Brent for October settlement, which expires Thursday, slid 21 cents to $51.79 on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of $5.47 to WTI.

“Global growth and oil demand has been favorable for oil prices since the start of the second half of 2017, and the storm should only introduce a brief period of weakness,” said Barnabas Gan, an economist at Oversea-Chinese Banking Corp. in Singapore.

Motiva’s Port Arthur refinery has a capacity to process 605,000 barrels of oil a day, according to data compiled by Bloomberg. Valero Energy Corp. is also said to be shutting its plant in the same area as flooding impacts the operation, according to a person familiar with the matter.

Oil-market news:

  • U.S. crude stockpiles dropped by 5.78 million barrels last week, the industry-funded American Petroleum Institute reported Tuesday, according to people familiar with the data.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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