Crude Oil

Brent and WTI Crude Fall as Hurricane Fears Ease and Chinese Demand Falters

Published

2 months ago

July 10, 2024

Oil prices dipped on Wednesday as the impact of Hurricane Beryl dissipated and inflation data highlighted stubbornly weak consumer demand in China, the world’s top crude importer.

Brent crude oil, against which the Nigerian oil is priced, dropped by 58 cents, or 0.69% to close at $84.08 a barrel following a 1.3% decline in the previous session.

U.S. West Texas Intermediate (WTI) crude also fell 48 cents, or 0.59% to $80.93 a barrel after a 1.1% drop the day before.

Both contracts have experienced a roughly 3% decline over the past three sessions. This trend is attributed to signs that the Texas energy industry weathered Hurricane Beryl with minimal lasting damage after the storm hit on Monday.

By Tuesday, oil and gas companies had restarted some operations, several ports had reopened, and most production facilities were ramping up output.

However, some facilities did sustain damage, and power had not been fully restored.

“Hurricane Beryl blowing over seems to be the biggest driver for the time being and an opportunity for traders to lock in some profits after a bullish run over the last two weeks,” said Suvro Sarkar, energy sector team lead at DBS Bank.

In addition to the hurricane’s diminishing impact, concerns over demand in China also weighed on oil prices. Consumer prices in China grew for a fifth consecutive month in June but fell short of expectations, while producer price deflation persisted.

“Expectations for easing tensions in the Middle East and weaker-than-expected CPI data for June from China pressed on oil prices today,” said independent market analyst Tina Teng.

In the Middle East, negotiations to secure a ceasefire in the Gaza conflict are set to resume in Doha, with intelligence chiefs from Egypt, the United States, and Israel in attendance.

Despite these factors, oil prices were somewhat supported by comments from U.S. Federal Reserve Chair Jerome Powell, suggesting a stronger case for interest rate cuts, which could spur economic growth and increase oil consumption.

Following Powell’s remarks, investors have continued to bet on a nearly 70% chance that the Fed will cut rates in September.

“Powell’s remarks to the Senate affirmed the improvement in data through the June quarter, while maintaining that more good data would boost confidence in the inflation outlook,” ANZ analysts noted in a Wednesday report.

Also, U.S. crude oil and gasoline inventories fell by 1.923 million barrels and 2.954 million barrels, respectively, according to market sources citing American Petroleum Institute (API) figures on Tuesday.

This decline indicates steady summer fuel demand, contributing to the rebound after days of price declines. Official data from the U.S. Energy Information Administration (EIA) is set to be released at 1630 GMT.

“Today’s U.S. inventory data will be keenly watched if drawdowns continue after last week’s massive draw,” said DBS Bank’s Sarkar.

As oil markets react to these dynamics, the interplay between hurricane recovery efforts, Chinese economic signals, and broader geopolitical developments will continue to shape crude prices in the coming weeks.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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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.