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Crude Oil

Oil Rises on Monday After U.S. Pledges Handle Iran Backed Groups

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Crude oil - Investors King

Oil prices nudged higher on Monday, recovering from sharp falls last week, after Washington pledged to launch further strikes on Iran-backed groups in the Middle East and as Ukrainian drones struck southern Russia’s largest refinery.

Brent crude oil rose 36 cents, or 0.5%, to $77.69 a barrel by 04:11 am while U.S. West Texas Intermediate oil was at $72.53 a barrel, up 25 cents, or 0.4%.

Both benchmarks ended last week down about 7%. They fell 2% on Friday after stronger-than-expected U.S. jobs data suggested interest rate cuts could be further out than expected, and on progress in ceasefire negotiations between Israel and Hamas.

“Hopes of a ceasefire between Israel and Hamas drove some of this weakness,” ING analysts said in a note.

“However, for now, a ceasefire does not appear imminent.”

Investors remained wary of any escalation in the Middle East conflict, after the U.S. signaled further strikes on Iran-backed groups in the Middle East in response to a deadly attack on U.S. troops in Jordan.

The U.S. also continued its campaign against the Iran-backed Houthis in Yemen, with 36 strikes on Saturday against the groups whose attacks on shipping vessels have disrupted global oil trading routes, although supply has been largely unaffected.

“Given the US military strikes avoid directly attacking Iran, we think the Israel‑Hamas ceasefire talks will have the more dominant effect ‑ thereby reducing Middle‑East tensions,” said Commonwealth Bank commodities analyst Vivek Dhar.

“Oil markets will likely respond by continuing to discount supply disruption risks in the Middle East,” he said in a client note on Monday, adding that would likely keep Brent futures below $80 a barrel.

On Friday, the U.S. Department of Justice announced sanctions-evasion charges and seizures linked to an oil trafficking network that it says finances Iran’s Islamic Revolutionary Guard Corps.

It seized more than 520,000 barrels of sanctioned Iranian oil aboard the crude tanker Abyss, which had been anchored in the Yellow Sea en route to China.

Iran’s budget targets oil sales of 1.35 million barrels per day for the Iranian year starting March 2024, about 1.3% of the 103.5 million bpd global supply forecasted by the International Energy Agency.

In Russia, two Ukrainian attack drones struck the largest oil refinery in the country’s south on Saturday, a source in Kyiv told Reuters, the latest in a series of long-range attacks on Russian oil facilities which has reduced Russia’s exports of naphtha, a petrochemical feedstock.

Lukoil, which owns the 300,000 barrels per day Volgograd refinery, later said the plant was working as normal.

In the U.S., power at BP’s 435,000 barrel-per-day oil refinery in Whiting, Indiana, had been restored by midday on Friday, but sources said BP had not yet set a date for restarting the plant.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Slide as U.S. Crude Stockpiles Surge, Heightening Demand Concerns

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Oil prices declined on Thursday as concerns over demand intensified due to a larger-than-anticipated build in U.S. crude stockpiles.

Brent crude oil, against which Nigerian oil is priced, dropped by 0.5% to $83.25 a barrel while U.S. West Texas Intermediate crude oil fell by 0.3% to $78.28 a barrel.

The Energy Information Administration’s report revealed a substantial increase in U.S. crude oil stockpiles by 4.2 million barrels to 447.2 million barrels for the week ending February 23rd.

This surge surpassed analysts’ expectations and marked the fifth consecutive week of rising inventories.

While gasoline and distillate inventories witnessed a decline, concerns regarding a sluggish economy and reduced oil demand in the U.S. were amplified.

Satoru Yoshida, a commodity analyst with Rakuten Securities, highlighted that the significant stockpiles have heightened investor worries.

Moreover, the anticipation of delayed U.S. interest rate cuts further weighed on market sentiment, potentially undermining oil demand.

Traders have adjusted their expectations for rate cuts, with an easing cycle predicted to commence in June rather than March as previously anticipated.

Market participants await the U.S. personal consumption expenditures price index for insights into inflation trends, while the possibility of an extension of voluntary oil output cuts from OPEC+ looms over price dynamics, amid lingering uncertainty in the demand outlook and geopolitical tensions in the Middle East.

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Crude Oil Shortage Threatens Dangote, Government Refineries, Minister Raises Alarm

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Dangote Refinery

The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has sounded a clarion call over a looming crude oil shortage that threatens the operations of the newly inaugurated Dangote Petrochemical Refinery and government-owned refineries in Nigeria.

Addressing stakeholders at the seventh edition of the Nigeria International Energy Summit in Abuja, Minister Lokpobiri expressed concerns that unless deliberate efforts are made to increase investments and crude oil production, these refineries may struggle to obtain enough feedstock for petroleum product manufacturing.

The Dangote refinery, a colossal project spearheaded by Dangote Industries Limited, has a daily requirement of up to 650,000 barrels of crude oil, while government-owned refineries could need approximately 400,000 barrels.

However, the current pace of crude oil production and investment in Nigeria falls short of meeting these demands.

Minister Lokpobiri highlighted the need to ramp up production and attract investments in the upstream sector to ensure adequate feedstock supply for the refineries.

He emphasized the importance of efficiently utilizing Nigeria’s abundant oil and gas reserves to enhance domestic energy security and economic prosperity.

Furthermore, the minister underscored the significance of investing in energy infrastructure and transitioning towards more environmentally friendly practices to address Nigeria’s energy needs effectively.

The alarm raised by Minister Lokpobiri underscores the urgency for strategic interventions and collaborative efforts to mitigate the impending crude oil shortage and secure the future of Nigeria’s refining industry amidst evolving global energy dynamics.

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Oil Prices Surge as Brent Approaches $83, WTI Nears $78 Amidst Refinery Buying Activity

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Crude oil - Investors King

Oil prices surged as Brent crude oil approached the $83 price level while West Texas Intermediate (WTI) neared $78 as refineries in the United States and China increased purchases.

Brent crude oil, against which Nigerian oil is priced, gained 1.1% on Monday, signaling a bullish trend in the oil market.

The recent uptick in oil prices comes amidst signs of heightened demand from refineries, particularly in key markets like the US and China.

This surge in demand has contributed to the strengthening of timespreads, indicating tighter conditions in the near term.

Market observers are closely monitoring the International Energy Week in London, where industry leaders are convening to discuss the outlook for the global energy market.

Scheduled speakers include Russell Hardy, the CEO of Vitol Group, a major player in the energy sector.

While tensions in the Middle East and production cuts by the OPEC+ alliance have supported crude prices, increased production from non-OPEC+ countries, notably the US, has capped potential gains.

Analysts predict that oil prices may continue to trade within a range, with Brent crude expected to hover around $83, while WTI remains near the $78 mark, barring significant shifts in market dynamics.

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