Oil prices rose more than $2 on Monday, extending gains as an energy crisis grips major economies amid a pick-up in economic activity and restrained supplies from major producers.
Brent crude was up $2.17, or 2.6%, at $84.56 a barrel by 1136 GMT, its highest since October 2018.
U.S. West Texas Intermediate (WTI) crude rose $2.67, or 3.4%, to $82.02 for its highest since late 2014.
“Oil prices are likely to continue climbing in the short term,” said Commerzbank analyst Carsten Fritsch.
Prices have risen as more vaccinated populations are brought out of coronavirus lockdowns, supporting a revival in economic activity, with Brent advancing for five weeks and U.S. crude for seven.
The pace of economic recovery combined with cold weather have increased the demand for energy, while pressure on governments to accelerate the transition to cleaner energy have slowed investment in oil projects to boost supplies.
World leaders are due to meet in November at the United Nations Climate Change Conference (COP26) taking place in Glasgow to flesh out commitments on energy transition.
Prices for coal, gas and electricity have also surged to record highs in recent weeks, driven higher by widespread energy shortages in Asia, Europe and the United States.
In India, some states are experiencing electricity blackouts because of coal shortages. China’s government, meanwhile, has ordered miners to ramp up coal production as power prices surge.
“The news from last week that the (U.S.) Department of Energy is not planning to tap into strategic reserves for now is keeping the oil market tight and is supporting prices,” said UBS analyst Giovanni Staunovo.
U.S. Energy Secretary Jennifer Granholm last week said the administration was considering tapping the country’s emergency oil reserves to cool gasoline prices, though the Energy Department later said it had “no plans to take action at this time”. read more
Drillers in the United States added five new oil wells last week for the fifth straight weekly increase in oil and gas rigs.
The Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, last week decided to maintain a steady and gradual increase in output.
“Depleting stocks, OPEC discipline and the ongoing energy crunch will provide solid price support in the next three months,” said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.
Oil Falls Slightly as China Steps in to Curb Rising Coal Prices
Global oil prices moderated slightly on Wednesday following the Chinese government’s decision to curb high coal prices and ensure coal mines function at maximum capacity.
Brent crude, against which Nigerian oil is priced, dropped to $83.98 per barrel at 11:00 am Nigerian time. While the U.S. West Texas Intermediate (WTI) crude fell by 80 cents or 1 percent to $81.20 a barrel.
“China is planning to take steps to combat the steep rises in the domestic coal market … which could put considerable pressure on the coal price there and reverse the fuel switch to oil,” Commerzbank said.
Prices for Chinese coal and other commodities slumped in early trade, which in turn pulled oil down from an uptick earlier in the day.
China’s National Development and Reform Commission said on Tuesday it would bring coal prices back to a reasonable range and crack down on any irregularities that disturb market order or malicious speculation on thermal coal futures. read more
Oil markets in general remain supported on the back of a global coal and gas crunch, which has driven a switch to diesel and fuel oil for power generation.
But the market on Wednesday was also pressured by data from the American Petroleum Institute industry group which showed U.S. crude stocks rose by 3.3 million barrels for the week ended Oct. 15, according to market sources.
That was well above nine analysts’ forecasts for a rise of 1.9 million barrels in crude stocks, in a Reuters poll.
However, U.S. gasoline and distillate inventories, which include diesel, heating oil and jet fuel, fell much more than analysts had expected, pointing to strong demand.
Data from the U.S. Energy Information Administration is due later on Wednesday.
Oil Prices Hit Multi-year Highs on Monday
Oil prices hit multi-year highs on Monday buoyed by recovering demand and high natural gas and coal prices encouraging users to switch to fuel oil and diesel for power generation.
Brent crude oil futures were up 59 cents, or 0.7%, to $85.45 a barrel by 0900 GMT, after hitting $86.04, their highest level since October 2018.
U.S. West Texas Intermediate (WTI) crude futures climbed 90 cents, or 1.1%, to $83.18 a barrel, after hitting a $83.73, their highest since October 2014.
Both contracts rose by at least 3% last week.
“Easing restrictions around the world are likely to help the recovery in fuel consumption,” analysts at ANZ bank said in a note, adding that gas-to-oil switching for power generation alone could boost demand by as much as 450,000 barrels per day in the fourth quarter.
Cold temperatures in the northern hemisphere are also expected to worsen an oil supply deficit, said Edward Moya, senior analyst at OANDA.
“The oil market deficit seems poised to get worse as the energy crunch will intensify as the weather in the north has already started to get colder,” he said.
“As coal, electricity, and natural gas shortages lead to additional demand for crude, it appears that won’t be accompanied by significantly extra barrels from OPEC+ or the U.S.,” he said.
Prime Minister Fumio Kishida said on Monday that Japan would urge oil producers to increase output and take steps to cushion the impact of surging energy costs on industry.
Chinese data showed third-quarter economic growth fell to its lowest level in a year hurt by power shortages, supply bottlenecks and sporadic COVID-19 outbreaks.
China’s daily crude processing rate in September also fell its lowest level since May 2020 as a feedstock shortage and environmental inspections crippled operations at refineries, while independent refiners faced tightening crude import quotas.
Oil and Gas Companies in Nigeria
Nigeria is an oil reach nation with several oil and gas companies operating in Africa’s largest economy. However, only ten oil and gas companies are listed on the Nigerian Exchange Limited (NGX).
Before we discuss in detail each of the listed oil and gas companies in Nigeria. A short background on Africa’s largest economy will help throw more light on the significance of the oil and gas companies or the entire oil sector to the Nigerian economy.
Nigeria is a petrol-dollar economy, which means Africa’s most populous nation, sells crude oil and use its proceed to service the economy. In fact, the Nigerian Naira is backed by crude oil like Canadian Dollar and other commodity-dependent economies.
But because the Central Bank of Nigeria (CBN) pegged the Naira against its global counterparts, the local currency does not reflect succinctly the fluctuation in global oil prices like other crude oil-dependent currencies.
Since global oil prices rebounded with the gradual reopening of economies, the oil and gas companies in Nigeria have also rebounded from the 2020 record low of $15 per barrel. The oil and gas sector has gained 62.76 percent from the year to date, according to the NGX Oil and Gas Index.
The index gauge price movements in 10 listed oil and gas companies in Nigeria. However, there are several oil and gas companies in Nigeria not listed on the Nigerian Exchange Limited.
Oil and Gas Companies Listed on the Nigerian Exchange Limited (NGX)
|Company||Ticker||Sector||Date Listed||Date Incorporated|
|ARDOVA PLC [CG+]||ARDOVA||OIL AND GAS||–||November 12, 1964|
|CAPITAL OIL PLC [MRF]||CAPOIL||OIL AND GAS||–||August 29, 1985|
|CONOIL PLC||CONOIL||OIL AND GAS||–||June 30, 1970|
|ETERNA PLC.||ETERNA||OIL AND GAS||–||January 13, 1989|
|JAPAUL GOLD & VENTURES PLC||JAPAULGOLD||OIL AND GAS||August 10, 2005||June 29, 1994|
|MRS OIL NIGERIA PLC.||MRS||OIL AND GAS||–||August 12, 1969|
|OANDO PLC [MRF]||OANDO||OIL AND GAS||February 24, 1992||August 25, 1969|
|RAK UNITY PET. COMP. PLC. [MRF]||RAKUNITY||OIL AND GAS||–||December 20, 1982|
|SEPLAT ENERGY PLC [CG+]||SEPLAT||OIL AND GAS||–||June 17, 2009|
|TOTALENERGIES MARKETING NIGERIA PLC||TOTAL||OIL AND GAS||–||January 6, 1956|
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