Crude Oil

Brent Crude Oil Faces Worst Quarterly Losses in Over 30 Years as Demand Concerns Persist

In a startling turn of events, Brent crude oil finds itself on a tumultuous path, heading towards its most significant quarterly losses in over three decades. Lingering concerns about the demand outlook have cast a dark shadow on the oil market, leaving traders and investors in a state of unease.

Published

3 months ago

June 30, 2023

Temitayo Olukoya

Futures trading in London has witnessed a persistent downward trend, with Brent crude prices above $74 per barrel, marking the fourth consecutive quarterly decline. Simultaneously, West Texas Intermediate (WTI) crude oil is also poised for its first back-to-back decline since 2019.

This unsettling development is a result of numerous challenges that have battered the market, Investors King gathered.

One of the primary factors hampering oil prices is the aggressive interest-rate hikes implemented by central banks, including the US Federal Reserve. These measures, aimed at combating inflationary pressures, have raised concerns about dampened energy consumption and its subsequent impact on the oil market.

Furthermore, the sluggish economic recovery in China, one of the world’s largest energy consumers, has exacerbated the gloomy sentiment.

The country’s lackluster growth has hampered oil demand, dealing a blow to prices. Additionally, resilient Russian supply has added to the headwinds faced by the market, as ample oil production limits any potential gains.

These combined challenges have created an enduring bearish atmosphere that has outweighed any positive impact from Saudi Arabia’s supply cuts or expectations of robust summer demand.

Even a recent but short-lived uprising in Russia failed to provide any substantial respite for the struggling oil prices.

The outlook for the second half of the year remains uncertain and met with a mix of cautious optimism and apprehension. Some industry analysts predict that the market could gradually tighten next month, citing the end of seasonal maintenance activities as a contributing factor.

However, others warn of a potential shift towards apathy if this expected tightening fails to materialize.

Yeap Jun Rong, a market strategist for IG Asia Pte. in Singapore, described the oil market as “walking on a tightrope,” with leading indicators suggesting downside risks to growth in the coming months. Rong emphasized the struggle faced by prices, as they fail to find the necessary conviction for a sustained rebound amidst the prevailing uncertainties.

The industry as a whole now waits with bated breath, hoping for a shift in sentiment that will bring stability to the oil market. The resolution of demand concerns and a favorable global economic recovery are crucial factors that could determine the future trajectory of Brent crude and its counterparts. Until then, the market remains delicately poised, as the energy sector grapples with its worst quarterly losses in more than thirty years.

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Crude Oil

Oil Prices Surge as China’s Holiday Demand and Tight US Supply Drive 2% Weekly Gain

Published

3 days ago

September 29, 2023

Samed Olukoya

Oil prices to close the week with about a 2% gain as robust holiday demand from China and constrained U.S. fundamentals overshadowed concerns about potential supply increases from Saudi Arabia.

Brent crude oil, against which Nigerian oil is priced, gained 5 cents to $95.43 per barrel at about 6:00 a.m. Nigerian time on Friday while the U.S. West Texas Intermediate crude (WTI) rose by 16 cents to $91.87 per barrel.

The market’s resilience became evident as it rebounded from a slight 1% dip in the previous session when profit-taking followed a surge in prices to 10-month highs.

China, the world’s largest oil importer, played a pivotal role in driving prices higher. Strong fuel demand coincided with China’s week-long Golden Week holiday, with increased international and domestic travel significantly boosting Chinese oil consumption.

Analysts at ANZ noted that this holiday season’s surge in travel was underpinned by the fact that the average daily flights booked were a fifth higher than during Golden Week in 2019, pre-dating the COVID-19 pandemic.

Also, improving macroeconomic data from China and the steady growth of its factory activity further supported the bullish sentiment.

The U.S. economy’s robust growth and indications of accelerated activity in the current quarter also bolstered expectations of sustained fuel demand.

Also, tight supplies in the U.S., evidenced by dwindling storage levels at Cushing, Oklahoma, provided additional support to oil prices. As rig counts fell, U.S. oil production was expected to slow down, potentially pushing the market into a deficit of more than 2 million barrels per day in the last quarter.

Investors are now eagerly awaiting the upcoming meeting of the Organization of the Petroleum Exporting Countries and allies (OPEC+), scheduled for October 4th.

The meeting will be a crucial indicator of whether Saudi Arabia will consider stepping up its supply in response to the nearly 30% surge in oil prices this quarter.

Analysts, however, caution that the market may be entering overbought territory, leading to possible hesitancy among participants and concerns that OPEC+ could ease production cuts earlier than planned if prices continue to rise.

The outcome of next week’s OPEC meeting will undoubtedly hold significant implications for the oil market’s future trajectory.

Crude Oil

Oil Prices Soar to a Year High as Crude Reserves Plummet

Crude stocks at a pivotal storage hub in Cushing, Oklahoma, hit their lowest levels since July last year, sparking concerns about future supply stability.

Published

4 days ago

September 28, 2023

Investors King

Oil prices surged to their highest level in over a year during Asian trading hours, following a significant drop in crude stocks at a key storage hub.

Crude inventories in Cushing, Oklahoma, plummeted to a mere 22 million barrels in the fourth week of September, close to operational minimums, according to data from the U.S. Energy Information Administration (EIA).

This translates to 943,000 barrels compared to the prior week.

The U.S. West Texas Intermediate (WTI) rose to $95.03 per barrel during Asian trading hours, a peak not seen since August 2022 before settling at $94.61 per barrel.

Meanwhile, Brent crude oil, the international benchmark for Nigerian oil, rose by 1.05% to $97.56 per barrel.

Experts have attributed this rapid price escalation to the precarious situation in Cushing, with Bart Melek, Managing Director of TD Securities, stating, “Today’s price action seems to be Cushing driven, as it reaches a 22 million bbl low, the lowest level since July 2022.”

Melek expressed concerns about the challenges of getting crude oil into the market if inventories continue to dip below these critical levels.

Predicting the future trajectory of oil prices, Melek suggested that prices could remain at elevated levels for the remainder of the year, especially if the global oil cartel, OPEC+, continues to enforce supply restrictions.

He noted that the global oil market is facing a “pretty robust deficit” on top of an already significant shortfall for this quarter due to OPEC’s production cuts.

Saudi Arabia, a key player in OPEC+, has extended its voluntary crude oil production cut of 1 million barrels per day until the year’s end, bringing its crude output to nearly 9 million barrels per day.

Russia has also pledged to continue its 300,000 barrels per day export reduction until December.

However, Melek added that, “We do think that prices could keep up near these levels for quite some time. But I don’t think it’s too permanent. And we might have seen the end of this rally.”

Crude Oil

Nigerian Pump Prices May Increase as Crude Oil Hits $93.55 Per Barrel

Published

6 days ago

September 26, 2023

Investors King

Amidst growing concerns over the surging price of crude oil on the international market, Nigerian citizens are bracing themselves for a possible increase in pump prices.

Crude oil, the lifeblood of Nigeria’s economy rose to $92.42 per barrel on Monday, casting a shadow of uncertainty over the already volatile fuel market.

This surge in crude oil prices comes in tandem with the persistent depreciation of the Naira in foreign exchange markets, where it traded at N980 to $1 on the parallel market. For many Nigerians, these simultaneous developments trigger memories of the recent fuel price hikes that followed the removal of fuel subsidies earlier this year.

In June, the government removed the subsidy, leading to a sharp 210% increase in the pump price from N175 per liter to N546.83 per liter. In a further blow to consumers, less than a month later, the price surged again, reaching N617 per liter.

However, since then, there have been no additional fuel increments, despite fluctuations in the Naira’s exchange rate. President Bola Ahmed Tinubu, along with key government officials and industry leaders, has reiterated their commitment to stabilizing petrol prices in the country.

According to Ajuri Ngelale, Special Adviser to the President on Media and Publicity, “The President affirms that there will be no increase in the price of petroleum motor spirit.”

Mele Kyari, Group Chief Executive of the Nigerian National Petroleum Corporation Limited (NNPC), echoed this sentiment, emphasizing that NNPC is the sole supplier of petrol nationwide and has not proposed any price hikes.

Industry experts like Chinedu Okonkwo, President of the Independent Marketers Association of Nigeria (IPMAN), have urged the government to expedite efforts in implementing Compressed Natural Gas (CNG) as a viable alternative to traditional fuels, providing a long-term solution to the country’s energy needs.

While the global crude oil price surge is a cause for concern, Nigerians are holding onto the government’s commitment to price stability and the potential for CNG to provide a sustainable energy alternative in the future.

In a market with unique dynamics, where NNPC remains the sole supplier and importer of fuel, the hope is that prices will remain stable for the benefit of all Nigerians.