Crude oil prices declined in the early hours of Wednesday after data showed U.S. crude oil inventories rose more than expected.
Brent crude oil, the international benchmark for Nigerian crude oil is priced, declined by $1.03, or 1.1%, to $92.49 a barrel by 0635 GMT, after settling 26 cents higher in the previous session.
U.S. West Texas Intermediate (WTI) crude futures for December were down 75 cents, or 0.9%, to $84.57, reversing the previous session’s gain.
“The prospect of a global economic slowdown and tighter monetary policy has been outweighing the spectre of supply reductions in recent weeks,” ANZ Research analysts said in a note.
U.S. crude inventories rose by about 4.5 million barrels in the week ended Oct. 21, according to market sources citing figures from the American Petroleum Institute, an industry group.
That was higher than expectations from five analysts polled by Reuters, who on average had expected a build of about 200,000 barrels.
While a rise in crude stockpiles reinforced fears of a global recession that would cut demand, ongoing supply constraints kept prices trading in a narrow range.
“OPEC production cuts effective November and the new EU sanctions on Russian oil to be enforced from December should be positive (for prices),” Stephen Innes, managing partner at SPI Asset Management, stated.
With respect to the wide WTI-Brent spread in recent sessions, Innes added that WTI buyers are watching for any more interventions by President Joe Biden ahead of the U.S. mid-term elections on Nov. 8.
Biden announced a plan last week to sell off the rest of a record release from the nation’s emergency oil reserve by year end as he tries to dampen high gasoline prices.
While smarting from the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together called OPEC+, to cut oil output, the White House on Tuesday welcomed moves by Saudi Arabia to help Ukraine in its war with Russia.
Biden, facing criticism over high inflation, has warned the Saudis would face consequences for aligning with Russia and agreeing to reduce crude supply.
Meanwhile, official U.S. stockpile data from the government’s Energy Information Administration is due on Wednesday at 1430 GMT.
Crude Oil Dips Slightly on Friday Amid Demand Concerns
On Friday, global crude oil prices experienced a slight dip, primarily attributed to mounting concerns surrounding demand despite signs of a tightening market.
Brent crude prices edged lower, nearing $83 per barrel, following a recent uptick of 1.6% over two consecutive sessions.
Similarly, West Texas Intermediate (WTI) crude hovered around $78 per barrel. Despite the dip, market indicators suggest a relatively robust market, with US crude inventories expanding less than anticipated in the previous week.
The oil market finds itself amidst a complex dynamic, balancing optimistic signals such as reduced OPEC+ output and heightened tensions in the Middle East against persistent worries about Chinese demand, particularly as the nation grapples with economic challenges.
This delicate equilibrium has led oil futures to mirror the oscillations of broader stock markets, underscoring the interconnectedness of global economic factors.
Analysts, including Michael Tran from RBC Capital Markets LLC, highlight the recurring theme of robust oil demand juxtaposed with concerning Chinese macroeconomic data, contributing to market volatility.
Also, recent attacks on commercial shipping in the Red Sea by Houthi militants have added a risk premium to oil futures, reflecting geopolitical uncertainties beyond immediate demand-supply dynamics.
While US crude inventories saw a slight rise, they remain below seasonal averages, indicating some resilience in the market despite prevailing uncertainties.
Nigeria’s Oil Rig Count Soars From 11 to 30, Says NUPRC CEO
The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has announced a surge in the country’s oil rig count.
Komolafe disclosed that Nigeria’s oil rigs have escalated from 11 to 30, a substantial increase since 2011.
Attributing this surge to concerted efforts by NUPRC and other governmental stakeholders, Komolafe highlighted the importance of instilling confidence, certainty, and predictability in the oil and gas industry.
He explained the pivotal role of the recently implemented Petroleum Industry Act (PIA), which has spurred significant capital expenditure amounting to billions of dollars over the past two and a half years.
Speaking in Lagos after receiving The Sun Award, Komolafe underscored the effective discharge of NUPRC’s statutory mandate, which has contributed to the success stories witnessed in the sector.
The surge in Nigeria’s oil rig count signifies a tangible measure of vibrant activities within the upstream oil and gas sector, reflecting increased drilling activity and heightened industry dynamism.
Also, Komolafe noted that NUPRC has issued over 17 regulations aimed at enhancing certainty and predictability in industry operations, aligning with the objectives outlined in the PIA.
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