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Crude Oil

Oil Prices Slide as Demand Concerns in US and China Outweigh Supply Tightening Efforts

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Crude oil - Investors King

In a turbulent start to the week, oil prices witnessed a decline as worries about fuel demand in the world’s leading oil consumers, the United States and China, outweighed optimistic sentiments regarding supply tightening measures implemented by OPEC+ and the resumption of US purchases for reserves.

Brent crude oil, the international benchmark for oil, declined by 26 cents or 0.35%, settling at $73.91 per barrel by 7:41 am. Simultaneously, US West Texas Intermediate crude oil stood at $69.34 per barrel, representing a decline of 20 cents or 0.29%.

Over the past week, both benchmarks recorded their fourth consecutive weekly decline, the longest such streak since September 2022. These declines were primarily fueled by concerns that the United States might plunge into a recession due to the looming “significant risk” of a historic default in the first two weeks of June.

The search for safe havens among investors resulted in a strengthened US dollar, making dollar-denominated commodities more expensive for holders of other currencies.

CMC Markets analyst Tina Teng highlighted that “Oil prices are still under pressure on sluggish demand outlooks as China’s economic reopening progress seems bumpy.” Teng further noted that market jitters were triggered by the recent banking rout in the US.

In the upcoming week, investors will closely scrutinize China’s array of economic data, including industrial output, fixed assets investment, and retail sales, searching for signs of improvement in oil demand.

IG analyst Tony Sycamore expressed his skepticism, stating that “With the uneven re-opening in China and concerns that the US is facing a growth slowdown at a time when the X-date for the debt ceiling is rapidly approaching, topped off by a rally in the US dollar, market sentiment towards crude oil will remain tepid at best.”

Despite the prevailing concerns, the second half of the year might witness a tightening of global crude supplies. The OPEC+ alliance, comprising the Organization of the Petroleum Exporting Countries and its allies, is enforcing additional output cuts, resulting in reduced availability of sour crude. According to Reuters calculations, the group announced in April that some members would decrease output by approximately 1.16 million barrels per day, bringing the total volume of cuts to 3.66 million bpd.

Nevertheless, Iraq’s oil minister, Hayan Abdel-Ghani, does not anticipate further output cuts during OPEC+’s next meeting in June.

On a different note, the United States is expected to recommence the repurchasing of oil for the Strategic Petroleum Reserve (SPR) following a congressionally mandated sale in June, as revealed by Energy Secretary Jennifer Granholm during a recent congressional hearing.

This announcement coincided with a weekly report by energy services firm Baker Hughes Co (BKR.O), which indicated that the number of US oil rigs dropped by two to reach 586 this week, the lowest level since June 2022. Furthermore, the number of gas rigs witnessed a significant decline of 16, totaling 141.

Meanwhile, officials with direct knowledge of the discussions disclosed that leaders of the Group of Seven (G7) nations may announce new measures during their May 19-21 meetings, targeting sanctions evasion involving third countries. These strengthened sanctions aim to impede Russia’s future energy production and curb trade that supports the Russian military. India and China, the top two crude importers globally, have become key purchasers of Russian crude since the European Union imposed an embargo in December.

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

Global Oil Prices Surge as US Lawmakers Suspend Debt Ceiling

Global oil prices appreciated on Friday after the United States lawmakers voted to have the country’s debt ceiling suspended for the next two years.

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Global oil prices appreciated on Friday after the United States lawmakers voted to have the country’s debt ceiling suspended for the next two years. On the final vote, 149 Republicans and 165 Democrats backed the measure, while 71 Republicans and 46 Democrats opposed it.

Brent crude oil, against which Nigerian oil is priced, rose by 77 cents, or 1% to $75.05 a barrel by 9 am while U.S. West Texas Intermediate crude (WTI) was up 69 cents, or 1%, at $70.79.

Markets were reassured by a bipartisan deal to suspend the limit on the U.S. government’s $31.4 billion debt ceiling, which staved off a sovereign default that would have rocked global financial markets.

Earlier signals of a potential pause in rate hikes by the Federal Reserve also provided support to oil prices, not least by weighing on the U.S. dollar , making oil cheaper for holders of other currencies.

Investor attention is now fixed on the June 4 meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, collectively called OPEC+.

OPEC+ in April announced a surprise cut of 1.16 million barrels per day in April, but the gains from that move have since been retraced and prices are below pre-cut levels.

But signals on any fresh cut have been varied, with Reuters reporting and bank analysts indicating that further output cuts are unlikely.

On the demand side, the U.S. Institute for Supply Management (ISM) said its manufacturing PMI fell to 46.9 last month, the seventh-straight month that the PMI stayed below 50, indicating a contraction in activity.

Manufacturing data out of China painted a mixed picture. Thursday’s better-than-expected Caixin/S&P Global China manufacturing PMI contrasted with the previous day’s official government data that reported factory activity in May had contracted to the lowest level in five months.

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Crude Oil

Weak Chinese Data Weighs on Oil Prices Today

Oil prices declined by 2% on Wednesday as weak Chinese data and a stronger United States dollar dragged on commodity prices.

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Crude Oil - Investors King

Oil prices declined by 2% on Wednesday as weak Chinese data and a stronger United States dollar dragged on commodity prices.

Brent crude oil, against which Nigerian oil is priced, dipped by $1.75, or 2.37%, to $71.96 a barrel at 3:46 pm while U.S. West Texas Intermediate crude (WTI) shed $1.90, or 2.74%, to $67.56.

The decline in prices was caused by weak Chinese manufacturing activity. The data released by the Chinese government showed that activity in the sector contracted faster than expected in May with the official manufacturing purchasing managers’ index declining from 49.2 posted in April to 48.8 in May, below the 49.4 predicted by economists.

Also, the strong U.S. dollar is another factor impacting the purchase of crude oil as buyers holding foreign currencies found it too expensive.

The U.S. dollar index, which measures the greenback against six major peers, saw support from cooling European inflation and progress on the U.S. debt ceiling standoff, which will advance to the House of Representatives for debate on Wednesday.

Market players are preparing for the upcoming June 4 meeting of OPEC+ – the Organization of the Petroleum Exporting Countries and allies including Russia.

Mixed signals by major OPEC+ producers on whether or not the group will decide to further cut oil production have sparked recent volatility in oil prices.

Despite the latest pullback in prices, HSBC and analysts do not expect OPEC+ to announce further cuts in the upcoming meeting.

HSBC said on Wednesday that stronger oil demand from China and the West from the summer onwards will bring about a supply deficit in the second half of the year.

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Crude Oil

NNPCL Confirms Pump Price Upward Review, See New Price List

The Nigerian National Petroleum Corporation Limited (NNPCL) on Wednesday confirmed it has indeed increased the price of petrol across the country.

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The Nigerian National Petroleum Corporation Limited (NNPCL) on Wednesday confirmed it has indeed increased the price of petrol across the country.

This was made known in a statement signed by Garba Deen Muhammad, the Chief Corporate Communications Officer of NNPC Ltd, and made available to the public.

The statement reads “NNPC Limited wishes to inform our esteemed customers that we have adjusted our pump prices of PMS across our retail outlets, in line with current market realities.

“As we strive to provide you with the quality service for which we are known, it is pertinent to note that prices will continue to fluctuate to reflect market dynamics.

“We assure you that NNPC Limited is committed to ensuring a ceaseless supply of products.

“The company sincerely regrets any inconvenience this development may have caused. We greatly appreciate your continued patronage, support, and understanding during this time of change and growth.”

Price of petrol jumped up across the country immediately after President Bola Ahmed Tinubu declared that the fuel subsidy is gone on Monday during his inauguration.

Checks by Investors King show that in some parts of the country, prices rose as high as 500% before NNPCL reportedly released the widely circulated list below to curtail marketers’ excesses.

Price was cheapest in Lagos at N488 a litre because of its close proximity to the port while it was highest in the northern states with Maiduguri and Damaturu recording the highest at N557 a litre. See the list below

NNPCL outlets across the country have been directed to implement the new price, starting from May 31, 2023.

“DEAR ALL. Following Management approval of the Upward review of NNPC PMS pump price as in below table for Mega/Standard/Leased Stations, Please find below schedules for the RMSs and Wayne to handle. Please implement meter change as approved effective today 31st May 2023. Wayne is to attend to all locations as relates to their area of coverage in our network,” a statement read.

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