On Tuesday, oil prices declined as the U.S. government announced plans to release more crude from its Strategic Petroleum Reserve (SPR).
The U.S. Department of Energy (DOE) stated that it would sell 26 million barrels of oil from the SPR, a move that some traders did not expect.
Brent crude oil, against which Nigerian oil is priced, fell by 0.81% to $85.91 per barrel, while U.S. crude oil shed 1.16% to $79.21 per barrel.
Energy traders were anticipating news about refilling the SPR, not tapping it for additional supplies. The decision to sell more crude from the SPR could push the reserve to its lowest level since 1983.
The DOE had considered canceling the fiscal year 2023 sale, but that would have required Congress to act to change the mandate.
Traders are closely monitoring Tuesday’s U.S. consumer price index (CPI) data for January to gain insights into the inflation rate. Higher-than-expected data may cause a renewed sell-off in risk assets, including oil.
Meanwhile, supply concerns have eased after the Energy Information Administration projected record March production from the seven biggest U.S. shale basins. In addition, crude exports have resumed at a key Turkish port after a devastating earthquake rocked the region.
Oil is on the defensive, and the situation could worsen if inflation proves to be harder to tame. While some traders did not expect the release of more crude from the SPR, the decision could have a significant impact on oil prices in the coming days.
As always, the market remains volatile and unpredictable, and traders must be vigilant and responsive to changes in market conditions.
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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