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Petrol Dominates Nigeria’s Oil Product Revenue

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The oil sector is Nigeria’s main source of revenue, and while there are calls for diversification in the country’s exports, the oil sector continues to bring in a lot of revenue for the country.

The Nigerian National Petroleum Company Limited announced on Wednesday that Nigeria earned N2.56 trillion in revenue from oil-related products.

The company announced that in only 13 months, the country brought in N2.56 trillion in revenue from the sales of petrol, kerosene and diesel. Petrol and diesel are generally used to fuel generators or cars, while kerosene is used largely to cook (either with stoves or with firewood in some parts). The staggered power supply in many areas of the country will undoubtedly be a contributor to the high amount of petrol sales, as people would seek to fuel their generators for alternative power supply.

These figures were revealed by the NNPC to be contained in the NNPC Monthly Financial and Operations Report for July 2021. According to a part of the report, the total revenue generated from the sale of white products (petrol, kerosene and diesel) between July 2020 and July 2021 sat at more than N2.563 trillion, with petrol (also known as Premium Motor Spirit, or PMS) making up about 99.6 percent of the total sales.

The report stated that in July 2021 alone, a total of 1.544 billion litres of petroleum products were sold and distributed by the Pipeline and Product Marketing Company (PPMC), with PPMC taking more than 99 percent of the entire volume.

Between July 2020 and July 2021, the total volume of petroleum products sold stood at 19.535 billion litres, with PMS (petrol) once again taking up 99% of the total volume.

This dominance by the petrol product underlines the long-standing reliance of the country on petrol (or PMS) for both internal use and export purposes. The reliance can be said to be forced, because many Nigerians have to turn to it due to the circumstances of the country. It can be argued that an improvement in the electricity situation will cause the reliance on petrol to be reduced.

 

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Crude Oil

Oil Drops to $93.32 a Barrel on Monday

Oil prices declined on Monday amid concerns over the recession and the drop in crude oil imports in China, the world’s largest importer of the commodity.

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Oil prices declined on Monday amid concerns over the recession and the drop in crude oil imports in China, the world’s largest importer of the commodity.

Brent crude oil, the international benchmark for Nigerian oil, dropped to $93.32 per barrel at 12:47 pm Nigerian time, down from $96.06 a barrel it attained during the Asian trading session.

U.S. West Texas Intermediate oil also depreciated from $89.47 a barrel to $87.45.

China, the world’s top crude importer, imported 8.79 million barrels per day (bpd) of crude in July, up from a four-year low in June, but still 9.5% lower than a year ago, customs data showed.

Chinese refiners drew down stockpiles amid high crude prices and weak domestic margins even as the country’s overall exports gained momentum.

Reflecting lower U.S. gasoline demand, and as China’s zero-Covid strategy pushes recovery further out, ANZ revised down its oil demand forecasts for 2022 and 2023 by 300,000 bpd and 500,000 bpd, respectively.

Oil demand for 2022 is now estimated to rise by 1.8 million bpd year-on-year and settle at 99.7 million bpd, just short of pre-pandemic highs, the bank said.

Russian crude and oil products exports continued to flow despite an impending embargo from the European Union that will take effect on Dec. 5.

In the United States, energy firms cut the number of oil rigs by the most last week since September, the first drop in 10 weeks.

The U.S. clean energy sector received a boost after the Senate on Sunday passed a sweeping $430 billion bill intended to fight climate change, among other issues.

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Crude Oil

Weak Manufacturing Data from China, Japan Weigh on Oil

Oil prices dropped on Monday, as weak manufacturing data from China and Japan for July weighed on the outlook for demand, while investors braced for this week’s meeting of officials from OPEC and other top producers on supply adjustments.

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Oil prices dropped on Monday, as weak manufacturing data from China and Japan for July weighed on the outlook for demand, while investors braced for this week’s meeting of officials from OPEC and other top producers on supply adjustments.

Brent crude futures were down 82 cents, or 0.8%, at $103.15 a barrel at 0608 GMT. U.S. West Texas Intermediate crude was at $97.44 a barrel, down $1.18, or 1.2%.

Fresh COVID-19 lockdowns snuffed out a brief recovery seen in June for factory activity in China, the world’s largest crude oil importer. The Caixin/Markit manufacturing purchasing managers’ index (PMI) eased to 50.4 in July from 51.7 in the previous month, well below analysts’ expectations, data showed on Monday.

Japanese manufacturing activity expanded at its weakest rate in 10 months in July, data showed on Monday.

“China’s disappointing manufacturing PMI is the primary factor that pressed on oil prices today,” CMC Markets analyst Tina Teng said.

“The data shows a surprising contraction of economic activities, suggesting that the recovery of the world-second-largest economy from the covid lockdowns may not be as positive as previously expected, which darkened the demand outlook of the crude oil markets.”

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Oil Dips Further on Concerns Over FOMC Interest Rate Increase

Crude oil declined on Monday, extending its bearish trend on concerns that the Federal Open Market Committee (FOMC) expected interest rates increase later this week could slow down growth and drag on demand.

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Crude oil declined on Monday, extending its bearish trend on concerns that the Federal Open Market Committee (FOMC) expected interest rates increase later this week could slow down growth and drag on demand.

Brent crude oil, the international benchmark for Nigerian oil, declined by $1.19 or 1.2% to $102.01 a barrel at 10:24 am Nigerian time on Monday. While the U.S. West Texas Intermediate (WTI) slid $1.33, or 1.4%, to $93.37 a barrel.

“Oil prices have been under pressure due to growing worries that aggressive rate rises by the U.S. Federal Reserve will slow the global economy and reduce fuel demand,” said Tetsu Emori, chief executive of Emori Fund Management Inc.

“Slack recovery in the Chinese economy is also weighing on market sentiment,” he said.

Oil futures have been volatile in recent weeks as traders have tried to reconcile the possibilities of further interest rate hikes, which could limit economic activity and thus cut fuel demand growth, against tight supply from disruptions in trading of Russian barrels because of Western sanctions amid the Ukraine conflict.

Officials at the Fed have indicated that the central bank would likely raise rates by 75 basis points at its July 26-27 meeting.

China, the world’s second-biggest economy, narrowly missed a contraction in the second quarter, growing just 0.4% year-on-year, weighed down by COVID-19 lockdowns, a weak property sector and cautious consumer sentiment.

“The market tone is likely to remain bearish also on worries that the resumption of some Libyan crude oil output would ease tightness in global supply,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.

On the supply side, Libya’s National Oil Corporation (NOC) aims to bring back production to 1.2 million barrels per day (bpd) in two weeks, NOC said in a statement early on Saturday.

The European Union said last week that it would allow Russian state-owned companies to ship oil to third countries under an adjustment of sanctions agreed by member states last week aimed at limiting the risks to global energy security.

However, Russian Central Bank Governor Elvira Nabiullina said on Friday that Russia would not supply oil to countries that decided to impose a price cap on its oil.

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