Crude Oil

Oil Prices Inch Higher as Supply Cuts Loom and Fed Maintains Rates

Published

1 year ago

September 4, 2023

Oil prices saw a modest uptick on Monday, driven by expectations of ongoing supply constraints from major oil producers and optimism that the Federal Reserve will refrain from altering interest rates.

Brent crude oil, the international benchmark for Nigerian oil, inched up by 3 cents to $88.58 per barrel at 4:00 a.m. Nigerian time while the U.S. West Texas Intermediate (WTI) crude oil gained 9 cents to $85.64 per barrel.

These slight gains during Asian trading followed the previous week’s closure, where both oils achieved their highest levels in over six months after rebounding from two weeks of decline.

Sugandha Sachdeva, Executive Vice President and Chief Strategist at Acme Investment Advisors, said, “The trajectory of crude oil prices has been significantly influenced by the anticipation of additional supply reductions by major oil-producing nations, Russia and Saudi Arabia.”

However, Sachdeva also cautioned that the consistent rise in U.S. oil production could restrict further substantial price increases.

Russian Deputy Prime Minister Alexander Novak revealed that Russia had reached an agreement with OPEC partners on the specifics of extended export cuts.

An official announcement detailing these planned cuts is expected later this week.

Russia had previously committed to a 300,000 barrels per day (bpd) reduction in exports for September, following a 500,000 bpd cut in August while Saudi Arabia is similarly anticipated to extend a voluntary 1 million bpd reduction into October.

During the APPEC conference in Singapore on Monday, Russell Hardy, CEO of Vitol, projected that the global crude market would experience a decrease in tightness over the next six to eight weeks due to refinery maintenance.

However, he emphasized that supplies of sour crude, characterized by higher sulfur content, would remain scarce.

Hardy remarked, “Due to the OPEC+ cuts, there isn’t enough supply of sour crude for the complex refineries in India, Kuwait, Jizan, Oman, and China.”

Also Read: Investors in Nigeria’s Stock Market Gain N1.411 Trillion in August

In the United States, job growth gained momentum in August even though the unemployment rate edged up to 3.8% and wage growth moderated. This suggests that labor market conditions are cooling, reinforcing the expectation that the Federal Reserve will abstain from raising interest rates this month to avoid further dampening the economy.

Meanwhile, in China, manufacturing activity unexpectedly expanded in August as indicated by data from Caixin’s manufacturing PMI survey. This development alleviated some pessimism regarding the economic health of the world’s largest oil importer.

Beijing’s recent announcement of economic support measures, including deposit rate cuts at major state-owned banks and eased borrowing rules for home buyers, has also provided support to oil prices.

Nonetheless, investors continue to anticipate more substantial actions to revitalize China’s beleaguered property sector, which has been a major drag on the country’s economy since emerging from the pandemic.

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Crude Oil

Oil Prices Rebound on OPEC+ Output Delay Talks and U.S. Inventory Drop

Published

2 days ago

September 5, 2024

Samed Olukoya

Oil prices made a modest recovery on Thursday on the expectations that OPEC+ may delay planned production increases and the drop in U.S. crude inventories.

Brent crude oil, against which Nigerian oil is priced, rose by 66 cents, or 0.9% to $73.36 per barrel while U.S. West Texas Intermediate (WTI) crude appreciated by 64 cents or 0.9% to $69.84 per barrel.

The rebound in oil prices was a result of the American Petroleum Institute (API) report that revealed that the U.S. crude oil inventories had fallen by a surprising 7.431 million barrels last week, against analysts 1 million barrel decline projection.

The decline signals better than projected demand for the commodity in the United States of America and offers some relief for traders on global demand.

John Evans, an analyst at PVM Oil Associates, attributed the rebound in crude oil prices to the API report.

He said, “There is a pause of breath and light reprieve for oil prices.”

Also, discussions within the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are fueling speculation about a potential delay in planned output increases.

The group was initially expected to increase production by 180,000 a day in October 2024.

However, concerns over softening demand in China and potential developments in Libya’s oil production have prompted the group to reconsider its strategy.

Despite the recent rebound, analysts caution that lingering uncertainties around global oil demand may continue to weigh on prices in the near term.

Crude Oil

Again NNPC Raises Petrol Price to N897/litre

Published

4 days ago

September 4, 2024

Investors King

The Nigerian National Petroleum Company (NNPC) Limited has once again increased the price of Premium Motor Spirit (PMS) from N855 per litre on Tuesday to N897 on Wednesday.

The increase was after Aliko Dangote, the Chairman of Dangote Refinery, announced the commencement of petrol production at its refinery.

The continuous increase in pump prices has raised concerns among Nigerians despite the initial excitement from the refinery announcement.

According to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the 650,000 barrels per day refinery will supply 25 million litres of petrol to the Nigerian market daily this September.

This, NMDPRA said will increase to 30 million litres per day in October.

However, the promise of increased fuel supply has not yet eased the situation on the ground.

Tunde Ayeni, a commercial bus driver at an NNPC station in Ikoyi, said “I have been in the queue since 6 a.m. waiting for them to start selling, but we just realised that the pump price has been changed to N897. This is terrible, and yet they still haven’t started selling the product.”

The price hike comes as NNPC continues to struggle with sustaining regular fuel supply.

On Sunday, the company warned that its ability to maintain steady distribution across the country was under threat due to financial strain.

NNPC cited rising supply costs as the cause of its difficulties in keeping up with demand.

Crude Oil

Brent and WTI Steady After Recent Losses as Libyan Oil Halt Continues

Published

5 days ago

September 2, 2024

Samed Olukoya

Oil prices stabilised on Monday as Libyan oil exports remained halted and following losses at the end of last week on expectations of higher OPEC+ production from October and signs of sluggish Chinese and U.S. demand.

Brent crude oil, against which Nigerian oil is priced, dipped by 6 cents, or 0.08% to close at $76.87 a barrel , while U.S. West Texas Intermediate crude edged up 8 cents, or 0.11% to $73.63.

Monday marked a public holiday in the U.S. market.

On Friday Brent and WTI lost 1.4% and 3.1%, respectively.

Oil exports at major Libyan ports were halted on Monday and production curtailed across the country, six engineers told Reuters, continuing a standoff between rival political factions over control of the central bank and oil revenue.

Libya’s Arabian Gulf Oil Company resumed output of around 120,000 barrels per day (bpd) on Sunday, to feed a power plant at the port of Hariga.

“The current disturbances in Libya’s oil production could provide room for added supply from OPEC+. But these fluctuations have become quite normal over the last few years, meaning any outages will probably be shortlived; with the news flow indicating signals for a restart of production have already been given,” said Bjarne Schieldrop, chief commodity analyst at SEB.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, is set to proceed with planned increases to oil output from October, six sources from the producer group told Reuters.

Eight OPEC+ members are scheduled to boost output by 180,000 barrels per day (bpd) in October as part of a plan to begin unwinding their most recent supply cuts of 2.2 million bpd while keeping other cuts in place until the end of 2025.

Both Brent and WTI have posted losses for two consecutive months as U.S. and Chinese demand concerns have outweighed recent disruptions in Libya and supply risk related to conflict in the Middle East.

More pessimism about Chinese demand growth surfaced after an official survey showed on Saturday that manufacturing activity sank to a six-month low in August as factory gate prices tumbled and owners struggled for orders.

“The softer-than-expected China PMI released over the weekend heightens concerns that the Chinese economy will miss growth targets,” IG market analyst Tony Sycamore said.

In the U.S., oil consumption in June dropped to seasonal lows last registered during the COVID-19 pandemic in 2020, Energy Information Administration data showed on Friday.