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Crude Oil

OPEC+ Extends Oil Cuts to 2025 to Combat Low Prices and Tepid Demand



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The Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, agreed on Sunday to extend their oil output cuts well into 2025.

This strategic extension is designed to shore up the market amid lackluster demand growth, high interest rates, and increasing competition from U.S. oil production.

Prolonged Cuts Amid Economic Uncertainty

Since late 2022, OPEC+ has implemented a series of deep output cuts to address declining oil prices and fluctuating demand. Currently, the group is reducing output by 5.86 million barrels per day (bpd), which represents approximately 5.7% of global demand.

This includes a substantial cut of 3.66 million bpd, originally set to expire at the end of 2024, and additional voluntary reductions totaling 2.2 million bpd, scheduled to conclude at the end of June 2024.

Under the new agreement, the 3.66 million bpd cut will be extended by a year, now expiring at the end of 2025.

Meanwhile, the voluntary cuts of 2.2 million bpd will be extended by three months to the end of September 2024. These cuts will then be gradually phased out over a year, starting in October 2024 and ending in September 2025.

Market Dynamics and Strategic Adjustments

This extension comes as Brent crude oil prices hover around $80 per barrel, below the fiscal break-even point for many OPEC+ members.

Concerns over sluggish demand in China, the world’s largest oil importer, coupled with rising oil stocks in developed economies, have contributed to the downward pressure on prices.

Saudi Energy Minister Prince Abdulaziz bin Salman said, “We are waiting for interest rates to come down and a better trajectory when it comes to economic growth … not pockets of growth here and there.”

The group’s cautious approach reflects a broader strategy to avoid a sudden influx of oil into the market, which could further depress prices. By extending and gradually phasing out cuts, OPEC+ aims to manage supply carefully while monitoring demand recovery.

Impact on Global Oil Market

The decision is expected to ease market fears of a sudden increase in OPEC+ production, which could exacerbate current oversupply issues.

Amrita Sen, co-founder of the Energy Aspects think tank, noted, “The deal should allay market fears of OPEC+ adding back barrels at a time when demand concerns are still rife.”

The International Energy Agency (IEA) projects that demand for OPEC+ oil, along with stock levels, will average around 41.9 million bpd in 2024, lower than OPEC’s estimates. This discrepancy underscores the uncertainties facing the global oil market.

Looking Ahead

While the extension of cuts marks a significant step towards stabilizing the market, challenges remain.

The United Arab Emirates (UAE), for instance, secured a new output target allowing for a gradual increase in production by 0.3 million bpd, reflecting its push for a higher quota.

Also, discussions on individual capacity targets for 2025 have been postponed to November 2025, highlighting ongoing negotiations within the group.

Prince Abdulaziz played a crucial role in orchestrating the deal, inviting key ministers to Riyadh for face-to-face discussions despite the primarily online meeting format. This hands-on approach was instrumental in reaching a consensus.

As OPEC+ prepares for its next meeting on December 1, 2024, the group’s ability to navigate complex market dynamics and internal negotiations will be critical in maintaining market stability.

The extended cuts demonstrate OPEC+’s commitment to addressing current economic challenges and ensuring a balanced oil market in the years ahead.

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

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Crude Oil

Nigeria Pumps 236.2 Million Barrels in First Half of 2024



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Nigeria pumped 236.2 million barrels of crude oil in the first half of 2024, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

This figure represents an increase from the 219.5 million barrels produced during the same period in 2023.

In January, Nigeria produced 44.2 million barrels of crude oil while February saw a slight dip to 38.3 million barrels, with March following closely at 38.1 million barrels.

April and May production stood at 38.4 million barrels and 38.8 million barrels, respectively. June’s output remained consistent at 38.3 million barrels, demonstrating a stable production trend.

Despite the overall increase compared to 2023, the 2024 production figures still fall short of the 302.42 million barrels produced in the same period in 2020.

This ongoing fluctuation underscores the challenges facing Nigeria’s oil sector, which has experienced varying production levels over recent years.

On a daily basis, Nigeria’s crude oil production showed some variability. In January, the average daily production peaked at 1.43 million barrels per day (mbpd), the highest within the six-month period.

February’s production dropped to 1.32 mbpd, with a further decrease to 1.23 mbpd in March. April saw a modest increase to 1.28 mbpd, which then fell again to 1.25 mbpd in May. June ended on a positive note with a slight rise to 1.28 mbpd.

The fluctuations in daily production rates have prompted government and industry leaders to address underlying issues.

Mele Kyari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), has highlighted the detrimental effects of oil theft and vandalism on Nigeria’s production capabilities.

Kyari emphasized that addressing these security challenges is critical to boosting production and attracting investment.

Kyari also noted recent efforts to combat illegal activities, including the removal of over 5,800 illegal connections from pipelines and dismantling more than 6,000 illegal refineries.

He expressed confidence that these measures, combined with ongoing policy reforms, would support Nigeria’s goal of increasing daily production to two million barrels.

The Nigerian government remains focused on stabilizing and enhancing oil production. With recent efforts showing promising results, there is cautious optimism that Nigeria will achieve its production targets.

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Oil Prices Steady Amid Mixed Signals on Crude Demand



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Oil prices remained stable on Thursday as investors navigated conflicting signals regarding crude demand.

Brent crude oil, against which Nigerian oil is priced, settled at $85.11 a barrel, edging up by 3 cents, while U.S. West Texas Intermediate (WTI) crude dipped by 3 cents to $82.82 a barrel.

The stability comes as the U.S. economy shows signs of slowing, with unemployment benefit applications rising more than expected.

Initial claims increased by 20,000 to a seasonally adjusted 243,000 for the week ending July 1, prompting speculation that the Federal Reserve might cut interest rates sooner than anticipated. Lower rates could boost spending on oil, creating a bullish outlook for demand.

Fed officials suggested that improved inflation and a balanced labor market might lead to rate cuts, possibly by September.

“Healthy expectations of a Fed rate cut in the not-so-distant future will limit downside,” noted Tamas Varga of oil broker PVM.

However, rising jobless claims signal potential economic easing, which could dampen crude demand.

John Kilduff of Again Capital highlighted the impact of a slowing economy on oil consumption despite a significant drop in U.S. crude inventories last week.

Global factors also weighed on the market. China’s economic policies remain steady, though details are sparse, affecting investor sentiment in the world’s largest crude importer.

Meanwhile, the European Central Bank maintained interest rates, citing persistent inflation.

An upcoming OPEC+ meeting in August is expected to assess market conditions without altering output policy, according to sources. This meeting will serve as a “pulse check” for market health.

Overall, oil prices are caught between economic concerns and hopes of a rate cut, maintaining a delicate balance.

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Crude Oil

Oil Prices Slide on China Demand Concerns, Brent Falls to $83.73



Crude Oil - Investors King

Oil prices declined on Tuesday for the third consecutive day on growing concerns over a slowing Chinese economy and its impact on global oil demand.

Brent crude oil, against which Nigerian oil is priced, dipped by $1.12, or 1.3% at $83.73 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped $1.15, or 1.4%, to close at $80.76.

The dip in oil prices is largely attributed to disappointing economic data from China, the world’s second-largest economy.

Official figures revealed a 4.7% growth in China’s GDP for the April-June period, the slowest since the first quarter of 2023, and below the forecasted 5.1% growth expected in a Reuters poll.

This slowdown was compounded by a protracted property downturn and widespread job insecurity, which have dampened fuel demand and led many Chinese refineries to cut back on production.

“Weaker economic data continues to flow from China as continued government support programs have been disappointing,” said Dennis Kissler, Senior Vice President of Trading at BOK Financial. “Many of China’s refineries are cutting back on weaker fuel demand.”

Despite the bearish sentiment from China, there is a growing consensus among market participants that the U.S. Federal Reserve could begin cutting its key interest rates as soon as September.

This speculation has helped stem the decline in oil prices, as lower interest rates reduce the cost of borrowing, potentially boosting economic activity and oil demand.

Federal Reserve Chair Jerome Powell noted on Monday that the three U.S. inflation readings over the second quarter “add somewhat to confidence” that the pace of price increases is returning to the central bank’s target in a sustainable fashion.

This has led market participants to believe that a turn to interest rate cuts may be imminent.

Also, U.S. crude oil inventories provided a silver lining for the oil market. According to market sources citing American Petroleum Institute figures, U.S. crude oil inventories fell by 4.4 million barrels last week.

This was a much steeper drop than the 33,000 barrels decline that was anticipated, indicating strong domestic demand.

The International Monetary Fund (IMF) also weighed in, suggesting that while the global economy is set for modest growth over the next two years, risks remain.

The IMF noted cooling activity in the U.S., a bottoming-out in Europe, and stronger consumption and exports for China as key factors in the global economic landscape.

In summary, while oil prices are currently pressured by concerns over China’s economic slowdown, the potential for U.S. interest rate cuts and stronger domestic demand for crude are providing some support.

Market watchers will continue to monitor economic indicators and inventory levels closely as they gauge the future direction of oil prices.

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