Crude Oil

Brent Crude Hits $80 as Supply Risks and Eased Recession Fears Drive Oil Prices Up

Published

4 weeks ago

August 12, 2024

Brent crude oil prices surged past the $80 per barrel mark on Monday for a fifth consecutive day of gains as a combination of eased U.S. recession fears and heightened geopolitical tensions in the Middle East provided robust support to the market.

Brent crude oil, against which Nigerian oil is priced, was up 70 cents, or 0.9% to $80.36 a barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude saw an increase of 84 cents, or 1.1%, reaching $77.68 per barrel.

The rally in oil prices comes on the heels of a strong performance last week, during which Brent gained more than 3% and WTI rose by 4.5%.

Analysts attribute the continued upward momentum to improving economic indicators in the United States, which have alleviated concerns about a potential recession in the world’s largest economy.

“Support is coming from last week’s better-than-expected U.S. data, which eased fears of a U.S. recession,” said Tony Sycamore, a market analyst at IG Markets. “The market is responding positively to signs of economic resilience, which in turn has bolstered demand expectations for oil.”

Adding to the bullish sentiment, geopolitical risks in the Middle East have intensified.

Tensions between Iran and Israel are escalating, with analysts expressing concern about potential disruptions in the region’s oil supply.

Iran has vowed retaliation following the assassinations of key leaders from Hamas and Hezbollah, raising fears of further instability in the region.

“There is a great deal of anxiety about when Iran might look to avenge Israel’s actions. It feels like a matter of when, not if,” Sycamore added.

Meanwhile, ongoing conflicts in the Middle East continue to contribute to the uncertainty. Over the weekend, the Israeli military intensified its operations in Gaza, leading to significant casualties and further complicating the prospects for peace in the region.

The situation has kept the market on edge, with traders closely monitoring any developments that could impact oil flows.

Despite the current upward trend, the Organization of the Petroleum Exporting Countries (OPEC) recently revised its forecast for global oil demand growth in 2024.

The cartel cited weaker-than-expected data from the first half of the year and softer economic expectations for China as reasons for the downgrade.

OPEC’s more cautious outlook has tempered some of the optimism in the market, though the immediate concerns about supply disruptions have kept prices buoyant.

In the U.S., economic data released last week showed that inflation appeared to be cooling, prompting speculation that the Federal Reserve might be inclined to cut interest rates sooner rather than later.

Such a move would likely support economic growth, further boosting demand for oil.

“The market is still waiting for Iran’s response,” said Warren Patterson, head of commodities research at ING. “But in the meantime, the economic data is providing a solid floor for prices.”

Up Next

Crude Oil Prices Inch Up as U.S. Stockpiles Fall, Market Eyes Middle East Conflict

Don't Miss

Oil Prices Edge Higher Amid Middle East Tensions, U.S. Jobs Data Eases Demand Worriesast Tensions, Supply Risks Offset Demand Fears

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.

Comments

Crude Oil

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

Published

3 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

6 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.