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Oil Prices Gained During Asian Trading on Monday

Global oil prices extended their bullish run on Monday during the Asian trading session following a decline in the United States Dollar attractiveness and the persistent supply concerns for the commodity.

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Oil prices - Investors King

Global oil prices extended their bullish run on Monday during the Asian trading session following a decline in the United States Dollar attractiveness and the persistent supply concerns for the commodity.

Brent crude, against which Nigerian oil is priced, rose to $101.86 a barrel after plunging to $96.46 on Thursday when the U.S. Bureau of Statistics reported that the inflation rate accelerated at 9.1% in the month of May, the fastest pace of increase in over 40 years.

U.S. West Texas Intermediate crude oil also appreciated to $94.87 per barrel on Monday.

Last week, Dollar and other global assets posted their biggest drop on fear global economic recession is around the corner given a series of happenings like the reported rising COVID-19 cases and testing in the world’s biggest importer of crude oil.

This, experts predicted could derail whatever measures central banks put in place to curb the further escalation of consumer prices and erode retail sales. However, data released by the U.S. Commerce Department showed retail sales rose strongly in the month of June despite the high inflation number, rising by 1% from a 0.1% decline reported in May.

A critical look into the report showed even though retail sales increased, the quantity purchased did not increase. Meaning that the increase was only in response to higher prices and not based on needs.

“Padded by high savings and rising wages, American households are spending nearly as much money as they did earlier, but largely to keep up with higher prices, not to actually buy more stuff,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “That said, today’s report may cool talk of a near-term recession.”

Still, supply remained a concern as long as Russia stay off the European market.

According to Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA, “Supply risks remain evident in international markets, and futures curves remain in backwardation. Despite the ructions in the speculative futures markets, the real-world dynamic remains as supportive of oil prices as ever. If Russian doesn’t switch gas exports back on to Europe at the end of the week, Brent crude could once again, find itself back near $110.00 a barrel.”

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

NNPC Limited Discovered 395 Illegal Refineries

The Nigerian National Petroleum Company Limited (NNPCL) has discovered 395 illegal oil refineries among other illegal assets.

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Oil Declines Below 60USD A Barrel

The Nigerian National Petroleum Company Limited (NNPCL) has discovered 395 illegal oil refineries among other illegal assets.

At the Senate briefing in Abuja on Tuesday, the Chairman of NNPCL discloses that the company has discovered and shut down 395 illegal oil refineries. He also noted that 273 wood boats were taken down while 374 illegal oil reservoirs were destroyed. 

Mele Kyari noted that serious actions are being undertaken to curtail oil theft in the Niger Delta region.

“We have deactivated 395 illegal refineries; we have taken down 273 wooden boats, we have destroyed 374 illegal reservoirs, we destroyed 1,561 metal tanks.” Mele Kyari said.

He added, “We have seized over 49 trucks and burnt them down; we have discovered illegal oil pits of 898 so far, and, 219 cooking sites have been taken down.”

Addressing the senate committee, Mele Kyari noted a criminal enterprise of such magnitude can cripple the oil revenue. 

The NNPC chairman also disclosed that they had caught wind of an illegal connection of four kilometres route into the sea running from its major Forcados line, which he estimates has been around for 9 years.

Investors King had earlier reported in September that for the first time in five years, Nigeria lost its crown as Africa’s largest oil producer to Angola.

According to the Managing Director and Country Chair for Shell, Mr Osagie Okunbor, oil theft was one of the reasons why Nigeria could not meet its OPEC quota of 1.8 million barrels a day.

Similarly, the head of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe said in a statement that about 141 million barrels of oil were produced in the first quarter of 2022, but only about 132 million barrels of oil were received at export terminals. 

Meanwhile, Kyari has proposed capital punishment for oil thieves and pipeline vandals. He noted that oil thieves are the country’s enemy and they should be treated as such. 

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Crude Oil

Crude Oil: Nigerian Government Set to Reopen 180,000bpd Trans Niger Pipeline

The Federal Government is set to re-open the Trans Niger Pipeline which has a production capacity of 180,000 barrels of crude oil per day. 

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Six months after the Trans Niger Pipeline (TNP) was shut down due to vandalism and oil theft, the Federal Government is set to re-open the pipeline which has a production capacity of 180,000 barrels of crude oil per day. 

Investors King learnt that Trans Niger Pipeline (TNP) serves as part of Nigeria’s gas liquids evacuation infrastructure, which is vital for domestic power generation and the export of liquefied gas.

According to a statement released by the General Manager of National Petroleum Investment Management Services (NAPIMS), Mr Bala Bunti on his official Twitter handle, the Trans Niger Pipeline will enhance Nigeria’s oil production capacity. 

The General Manager noted that NAPIMS has been in talks with the host communities along the pipeline to bolster security for the crucial oil infrastructure. 

“The NAPIMS leadership delegation under the  General Manager of Joint Venture operations, Engr Zakariya Budawara, had spent the last one week with the Bodo community in Gokana LGA of Rivers State where the pipeline is situated and runs through”. He said. 

Bunti further stated that the people of Bodo have pledged their commitment to ensure the security of the oil infrastructure in exchange for improved quality of life, job creation and capacity building. 

It will be recalled that the Trans Niger Pipeline was shut down by Shell Petroleum Development Company because of vandalization and oil theft. It has been moribund ever since because no crude has flown through it.

Investors King had earlier reported that Nigeria’s oil production has been characterised by theft, vandalism and sabotage which has led to a massive drop in production. 

Some major oil companies had announced a cease of operation because of vandalism and insecurity. 

In July 2022, the Managing Director and Country Chair for Shell Petroleum Development Company of Nigeria Limited, Osagie Okunbor said oil theft was one of the reasons that Nigeria could not meet its OPEC quota of 1.8 million barrels a day.

Similarly, in August 2022, for the first time in five years, Nigeria lost its crown as Africa’s largest oil producer to Angola.

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Crude Oil

Fear of Global Recession Weighs on Crude Oil Prices

Global uncertainty concerning recession continued to dictate the price of crude oil and other global commodities

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Crude oil - Investors King

Global uncertainty concerning recession continued to dictate the price of commodities, especially crude oil which has now declined for a second trading session on Monday.

Brent crude oil, against which Nigerian oil is priced, slipped by $1, or 1.2%, to $85.15 a barrel at 11:36 a.m Nigerian time on Tuesday. Brent crude dipped as low as $84.51, the lowest since Jan. 14.

U.S. West Texas Intermediate (WTI) crude shed 87 cents, or 1.1%, to $77.87 a barrel. WTI dropped as low as $77.21, the lowest since Jan. 6.

Brent and WTI slumped by about 5% on Friday.

The dollar index that measures the greenback against a basket of major currencies climbed to a 20-year high on Monday.

A stronger dollar tends to curtail demand for dollar-denominated oil.

Meanwhile, interest rate increases imposed by central banks in numerous oil-consuming countries to fight surging inflation has raised fears of an economic slowdown and accompanying slump in oil demand.

“A backdrop of global monetary policy tightening by the key central banks to quell elevated inflation, and a splendid run-up in the greenback towards more than two-decade highs, has raised concerns about an economic slowdown and is acting as a key headwind for crude prices,” said Sugandha Sachdeva at Religare Broking.

Disruptions in the oil market from the Russia-Ukraine war, with European Union sanctions banning Russian crude set to start in December, has lent some support to prices.

Attention is turning to what the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, will do when they meet on Oct. 5, having agreed at their previous meeting to cut output modestly.

However, OPEC+ is producing well below its targeted output, meaning that a further cut may not have much impact on supply.

Data last week showed OPEC+ missed its target by 3.58 million barrels per day in August, a bigger shortfall than in July.

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