Brent crude oil, against which Nigerian crude oil is priced, declined by 0.6% decline to settle at $79.55 per barrel.
The dip was attributed to growing concerns over elevated global oil production which overshadows geopolitical tensions in regions like Europe and the Middle East.
One contributing factor to the downward pressure on oil prices was the resurgence of crude output in parts of the United States, particularly North Dakota, the third-largest oil-producing state.
Despite facing disruptions due to extreme cold, the state’s pipeline authority reported a partial recovery in oil production.
Nevertheless, output levels remained constrained, with a deficit of up to 300,000 barrels per day (bpd).
Another factor weighing on the market sentiment was the persistent weakness in U.S. gasoline demand.
John Kilduff, a partner at Again Capital LLC, noted that the slump in gasoline consumption had a direct impact on oil prices.
Gasoline inventories surged by 7.2 million barrels, contrasting with a 6.67 million barrel drop in U.S. crude stocks last week, according to American Petroleum Institute figures.
Global oil production received an additional boost from Norway, where crude production climbed from 1.81 million bpd in November 2023 to 1.85 million bpd in December, surpassing analysts’ expectations.
In Libya, the resumption of production at the Sharara oilfield, with a capacity of 300,000 bpd, further contributed to the mounting global oil supply.
However, the field had been temporarily halted due to protests earlier in the month.
While geopolitical tensions persisted, particularly with U.S. and British forces conducting strikes on Houthi positions in Yemen, these concerns did not provide sufficient momentum to counteract the prevailing market sentiment.
Bob Yawger, director of energy futures at Mizuho Bank, noted that while geopolitical pressures prevented a market bottom, they were insufficient to rally the oil market.
