Oil prices have risen on Monday as investors remain bullish on China’s demand recovery and concerned about underinvestment that could impact future oil supply. Major producers have also continued to limit output to support prices.
Brent crude oil increased by 0.8% to reach $83.70 a barrel, while West Texas Intermediate (WTI) crude oil reached $77.14 a barrel, up 0.7%.
The oil market has rebounded this week, driven mainly by China’s oil demand recovery and a shortage in oil supply due to underinvestment. Last week, oil prices fell by about 4% after the United States reported higher crude and gasoline inventories.
Despite the recent announcement that the U.S. will sell 26 million barrels of crude oil from its Strategic Petroleum Reserves, global supply is expected to remain flat to down due to production cuts by Russia and OPEC+.
National Australia Bank’s Head of Commodity Research, Baden Moore, said that the reopening of China and the rebound in China and global jet demand is likely to drive upside risk to prices. China is the world’s largest crude oil importer, and analysts expect its oil imports to hit an all-time high in 2023 due to increased demand for transportation fuel and as new refineries come onstream.
Although demand continues to rise, supply constraints, underinvestment, and shale limitations will likely drive prices towards $100 a barrel by the end of the year, according to analysts from Goldman Sachs.
The market’s pivot back to a deficit has caused a rebound in oil prices, as China’s demand recovery and supply concerns take center stage.
It is expected that oil prices will continue to rise in the coming months as the market returns to a deficit. Investors are cautiously optimistic about the future of oil prices, but only time will tell how sustainable the rally will be.
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.
Oil Prices Rebound in Asian Markets Amid Red Sea Shipping Concerns
Middle East Tensions Keep Oil Prices Near Three-Week Highs, China’s Economic Recovery Offers Support
Oil prices remained close to three-week highs on Tuesday, buoyed by ongoing tensions in the Middle East and signs of economic recovery in China.
Brent crude oil, against which Nigerian oil is priced, dipped by 29 cents to settle at $83.27 a barrel while U.S. West Texas Intermediate (WTI) crude oil fell 38 cents to $78.08 a barrel.
Geopolitical uncertainties in the Middle East, particularly heightened by Iran-aligned Houthi attacks on shipping lanes, continued to influence market sentiment.
The Houthis’ recent strikes have targeted vessels in the Red Sea and Bab al-Mandab Strait, escalating concerns about disruptions to global shipping.
Meanwhile, China’s economic resilience served as a counterbalance to the geopolitical tensions. The country’s tourism revenue surged by 47.3% year-on-year, surpassing pre-COVID levels during the Lunar New Year holiday.
Also, China implemented a record cut to a benchmark mortgage reference rate to stabilize its property market and economy.
Despite these supportive factors, concerns about global oil demand lingered following a bearish report by the International Energy Agency (IEA).
The IEA revised its 2024 oil demand growth forecast downward, reflecting the ongoing transition to cleaner energy sources worldwide.
As such, market participants remain vigilant about the delicate balance between geopolitical risks and demand dynamics influencing oil prices.
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