Oil prices maintained a steady stance in the global market as signals of strengthening demand in the United States provided support amidst ongoing geopolitical tensions.

Brent crude oil, against which Nigerian oil is priced, holds at $82.79 per barrel, a marginal increase of 4 cents or 0.05%.

Similarly, U.S. West Texas Intermediate (WTI) crude saw a slight uptick of 4 cents to $78.67 per barrel.

The stability in oil prices came in the wake of favorable data indicating a potential surge in demand from the U.S. market.

An analysis by MUFG analysts Ehsan Khoman and Soojin Kim pointed to a broader risk-on sentiment spurred by signs of receding inflationary pressures in the U.S., suggesting the possibility of a more accommodative monetary policy by the Federal Reserve.

This prospect could alleviate the strength of the dollar and render oil more affordable for holders of other currencies, consequently bolstering demand.

Despite a brief dip on Wednesday, when Brent crude touched an intra-day low of $81.05 per barrel, the commodity rebounded, indicating underlying market resilience.

This bounce-back was attributed to a notable decline in U.S. crude oil inventories, gasoline, and distillates.

The Energy Information Administration (EIA) reported a reduction of 2.5 million barrels in crude inventories to 457 million barrels for the week ending May 10, surpassing analysts’ consensus forecast of 543,000 barrels.

John Evans, an analyst at PVM, underscored the significance of increased refinery activity, which contributed to the decline in inventories and hinted at heightened demand.

This development sparked a turnaround in price dynamics, with earlier losses being nullified by a surge in buying activity that wiped out all declines.

Moreover, U.S. consumer price data for April revealed a less-than-expected increase, aligning with market expectations of a potential interest rate cut by the Federal Reserve in September.

The prospect of monetary easing further buoyed market sentiment, contributing to the stability of oil prices.

However, amidst these market dynamics, geopolitical tensions persisted in the Middle East, particularly between Israel and Palestinian factions. Israeli military operations in Gaza remained ongoing, with ceasefire negotiations reaching a stalemate mediated by Qatar and Egypt.

The situation underscored the potential for geopolitical flare-ups to impact oil market sentiment.

Shell Nigeria Exploration and Production Company Limited (SNEPCo) has achieved a significant milestone as its Bonga field, Nigeria’s first deep-water development, hit a record high production of 138,000 barrels per day in 2023.

This represents a substantial increase when compared to 101,000 barrels per day produced in the previous year.

The improvement in production is attributed to various factors, including the drilling of new wells, reservoir optimization, enhanced facility management, and overall asset management strategies.

Elohor Aiboni, Managing Director of SNEPCo, expressed pride in Bonga’s performance, stating that the increased production underscores the commitment of the company’s staff and its continuous efforts to enhance production processes and maintenance.

Aiboni also acknowledged the support of the Nigerian National Petroleum Company Limited and SNEPCo’s co-venture partners, including TotalEnergies Nigeria Limited, Nigerian Agip Exploration, and Esso Exploration and Production Nigeria Limited.

The Bonga field, which commenced production in November 2005, operates through the Bonga Floating Production Storage and Offloading (FPSO) vessel, with a capacity of 225,000 barrels per day.

Located 120 kilometers offshore, the FPSO has been a key contributor to Nigeria’s oil production since its inception.

Last year, the Bonga FPSO reached a significant milestone by exporting its 1-billionth barrel of oil, further cementing its position as a vital asset in Nigeria’s oil and gas sector.

Nigeria’s crude oil sales for the month of May are facing significant hurdles as a result of subdued demand from European buyers, signaling a challenging start to the month for one of Africa’s largest oil producers.

Reports from industry insiders suggest that approximately 10 cargoes of Nigeria’s crude oil designated for May loading are still available for purchase.

While this figure represents about a fifth of the country’s total exports for the month, it indicates the sluggish pace at which Nigerian crude is being absorbed by the market.

The slow movement of Nigerian barrels comes against the backdrop of a broader bearish sentiment in the Atlantic Basin crude market.

A surge in U.S. oil exports has weighed down prices, affecting refinery feedstock demand not only in Europe but also in West Africa.

Despite European refineries resuming operations after seasonal maintenance, prices for Nigerian crude as well as other alternatives like Azeri Light and West Texas Intermediate, have struggled to gain traction.

James Davis, director of short-term oil market research at FGE, commented on the situation, noting, “We’ve got much weaker margins so crude demand is taking a hit.”

One of the factors contributing to Nigeria’s lag in crude oil sales is the insistence by sellers on premiums over the Dated Brent benchmark. These premiums, however, proved too high for European refiners, prompting a reassessment of pricing strategies.

Christopher Haines, global crude analyst at Energy Aspects Ltd., explained, “May cargoes were at a premium that didn’t work that well into Europe, but lower offers have seen volumes move.”

While some Nigerian crude grades have become more competitively priced, especially for markets like Asia and the Mediterranean, the overhang of unsold cargoes persists. June and July shipments remain on sale, further complicating the outlook for Nigeria’s oil exports in the coming months.

In contrast, Angola, another major oil-producing nation, has experienced relatively stable sales to China. With less than 10 shipments for June loading seeking buyers out of 37 scheduled, Angola’s medium-to-heavy sweet crude has found more favor with Chinese refiners compared to Nigeria’s lighter output.