Markets

Nigeria, Saudi Record Biggest Increase in Oil Output

Published

6 years ago

January 22, 2018

Nigeria, Saudi Record Biggest Increase in Oil Output

Crude oil production in Nigeria rose by 88,700 barrels per day last month, the second biggest increase among its peers in the Organisation of Petroleum Exporting Countries.

But the fresh threat by Niger Delta militants to attack some oil and gas facilities in the region may pose a risk to the nation’s oil production.

OPEC, in its Monthly Oil Market Report for January released on Friday, put Nigeria’s output at 1.861 million bpd for December, from 1.785 million bpd in the previous month, according to secondary sources.

The 14-member oil group uses secondary sources to monitor its oil output, but also publishes a table of figures submitted by its member countries.

Based on direct communication, the nation’s output stood at 1.636 million barrels in December, up from 1.547 million bpd in November, said the report.

Saudi Arabia, the largest producer in the group, recorded the biggest increase in December as it produced 9.98 million bpd, up from 9.89 million bpd in the previous month.

According to the secondary sources, the total OPEC crude oil production averaged 32.42 million bpd in December, a minor increase of 42,000 bpd over the previous month.

“Crude oil output increased in Nigeria, Angola and Algeria, while production declined by 80,000 bpd month-on-month in Venezuela,” the group said in the report.

In Africa, production growth of 50,000 bpd – primarily from Ghana and Congo – is expected for 2018, to average 1.90 million bpd, according to the report.

After a year of ceasefire, militants under the aegis of the Niger Delta Avengers on Wednesday threatened to attack some offshore oil and gas facilities in the oil-rich region in a few days’ time.

In 2016, the nation saw a resurgence of militant attacks on oil and gas facilities in the Niger Delta, causing oil production to plummet to near 30-year lows of around 1.6 million bpd in August.

“This round of attacks will be the most deadly and will be targeting the deep sea operations of the multinationals,” the group said in a statement on its website.

Attacks on pipelines and other facilities in the Niger Delta in 2016 cut the nation’s crude production from a peak of 2.2 million barrels per day to near one million bpd – the lowest level in at least 30 years.

That, combined with low oil prices, pushed the country into its first recession in a quarter of a century – crude sales make up two-thirds of government revenue and most of its foreign exchange.

The militants agreed to a ceasefire in August 2016 – a development that helped pull Nigeria out of recession in the second quarter of last year. But they called off the truce in November last year.

Meanwhile, unsold barrels of crudes from West Africa could put pressure on the premiums of Malaysian crude cargoes for March loading, traders said, according to Platts.

Weaker demand, particularly from independent refineries in China, for February-loading Angolan and Nigerian grades had resulted in an overhang, traders said.

Traders indicated that these grades were now looking for home elsewhere in Asia, competing with other Asia Pacific crudes such as Malaysian crudes.

“West African overhang is more than 10 millions … [There is] no [place] to go,” a Southeast Asian crude trader said.

Another trader noted that the weakening tanker freight rates could mean that Asian buyers might consider the grades instead of Asian regional crudes when they would make their purchases this month.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, 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 Recover Slightly Amidst Demand Concerns in U.S. and China

Published

2 days ago

December 7, 2023

Investors King

Oil prices showed signs of recovery on Thursday after a recent slump to a six-month low, with Brent crude oil appreciating by 1% to $75.06 a barrel while the U.S. West Texas Intermediate crude oil also rose by 1% to $70.05 a barrel.

However, investor concerns persist over sluggish demand in both the United States and China.

The market’s unease was triggered by data indicating that U.S. oil output remains close to record highs despite falling inventories.

U.S. gasoline stocks rose unexpectedly by 5.4 million barrels to 223.6 million barrels, adding to the apprehension.

China, the world’s largest oil importer, also contributed to market jitters as crude oil imports in November dropped by 9% from the previous year.

High inventory levels, weak economic indicators, and reduced orders from independent refiners were cited as factors weakening demand.

Moody’s recent warnings on credit downgrades for Hong Kong, Macau, Chinese state-owned firms, and banks further fueled concerns about China’s economic stability.

Oil prices have experienced a 10% decline since OPEC+ announced voluntary output cuts of 2.2 million barrels per day for the first quarter of the next year.

In response to falling prices, OPEC+ member Algeria stated that it would consider extending or deepening oil supply cuts.

Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman met to discuss further oil price cooperation, potentially boosting market confidence in the effectiveness of output cuts.

Russia, part of OPEC+, pledged increased transparency regarding fuel refining and exports, addressing concerns about undisclosed fuel shipments.

Crude Oil

Oil Prices Continue Slide as Market Skepticism Grows Over OPEC+ Cuts

Published

3 days ago

December 6, 2023

Investors King

Global oil markets witnessed a continued decline on Wednesday as investors assessed the impact of extended OPEC+ cuts against a backdrop of diminishing demand prospects in China.

Brent crude oil, the international benchmark for Nigerian crude oil, declined by 63 cents to $76.57 a barrel while U.S. WTI crude oil lost 58 cents to $71.74 a barrel.

Last week, the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, agreed to maintain voluntary output cuts of approximately 2.2 million barrels per day through the first quarter of 2024.

Despite this effort to tighten supply, market sentiment remains unresponsive.

“The decision to further reduce output from January failed to stimulate the market, and the recent, seemingly coordinated, assurances from Saudi Arabia and Russia to extend the constraints beyond 1Q 2024 or even deepen the cuts if needed have also fallen to deaf ears,” noted PVM analyst Tamas Varga.

Adding to the unease, Saudi Arabia’s decision to cut its official selling price (OSP) for flagship Arab Light to Asia in January for the first time in seven months raises concerns about the struggling demand for oil.

Amid the market turmoil, concerns over China’s economic health cast a shadow, potentially limiting fuel demand in the world’s second-largest oil consumer.

Moody’s recent decision to lower China’s A1 rating outlook from stable to negative further contributes to the apprehension.

Analysts will closely watch China’s preliminary trade data, including crude oil import figures, set to be released on Thursday.

The outcome will provide insights into the trajectory of China’s refinery runs, with expectations leaning towards a decline in November.

Russian President Vladimir Putin’s diplomatic visit to the United Arab Emirates and Saudi Arabia has added an extra layer of complexity to the oil market dynamics.

Discussions centered around the cooperation between Russia, the UAE, and OPEC+ in major oil and gas projects, highlighting the intricate geopolitical factors influencing oil prices.

Crude Oil

U.S. Crude Production Hits Another Record, Posing Challenges for OPEC

Published

4 days ago

December 5, 2023

Investors King

U.S. crude oil production reached a new record in September, surging by 224,000 barrels per day to 13.24 million barrels per day.

The U.S. Energy Information Administration reported a consecutive monthly increase, adding 342,000 barrels per day over the previous three months, marking an annualized growth rate of 11%.

The surge in domestic production has led to a buildup of crude inventories and a softening of prices, challenging OPEC⁺ efforts to stabilize the market.

Despite a decrease in the number of active drilling rigs over the past year, U.S. production continues to rise.

This growth is attributed to enhanced drilling efficiency, with producers focusing on promising sites and drilling longer horizontal well sections to maximize contact with oil-bearing rock.

While OPEC⁺ production cuts have stabilized prices at relatively high levels, U.S. producers are benefiting from this stability.

The current strategy seems to embrace non-OPEC non-shale (NONS) producers, similar to how North Sea producers did in the 1980s.

Saudi Arabia, along with its OPEC⁺ partners, is resuming its role as a swing producer, balancing the market by adjusting its output.

Despite OPEC’s inability to formally collaborate with U.S. shale producers due to antitrust laws, efforts are made to include other NONS producers like Brazil in the coordination system.

This outreach aligns with the historical pattern of embracing rival producers to maintain control over a significant share of global production.

In contrast, U.S. gas production hit a seasonal record high in September, reaching 3,126 billion cubic feet.

However, unlike crude, there are signs that gas production growth is slowing due to very low prices and the absence of a swing producer.

Gas production increased by only 1.8% in September 2023 compared to the same month the previous year.

While the gas market is in the process of rebalancing, excess inventories may persist, keeping prices low.

The impact of a strengthening El Niño in the central and eastern Pacific Ocean could further influence temperatures and reduce nationwide heating demand, impacting gas prices in the coming months.