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Business News

Global oil prices drop after reports of unexpected inventory build

The report also stated that distillate inventories were up by 6.9 million barrels for the week, as against last week’s 5.1 million barrel inventories.

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Global crude oil prices

Global crude oil prices declined slightly after a report by the American Petroleum Institute (API), on Tuesday, estimated a large crude oil inventory build of 8.731 million barrels for the week ended May 22, 2020. The situation is raising fresh concerns about excess supply.

The oil price decline was also extended due to uncertainty over Russia’s commitment to deep oil production cuts in the lead up to an OPEC+ meeting on June 9, 2020.

The American WTI fell by over 2% to end up at $32.09 per barrel as at 3 am on Thursday. Similarly, Brent crude further declined by 1.24% to sell at $34.31 per barrel, while the Bonny light crude was down by 2.32% to sell at $33.28 per barrel.

Analysts had predicted an inventory draw of 2.50 million barrels. In the previous week, the API had estimated a draw in crude oil inventories of 4.8 million barrels. Meanwhile, estimates by the US Energy Information Administration (EIA) were different, with the industry body reporting last week that the inventories had declined by 5 million barrels.

(READ MORE: Crude oil prices drop over fears of virus resurgence)

The oil prices were already on a decline before the API’s data release, although the outlook for a rebalanced oil market is more positive than it was just two weeks ago. This is because many U.S states and some major economies around the world are easing lockdown restrictions, even as the world’s largest oil producers like Saudi Arabia, Russia, and the United States are implementing more output cuts than market analysts had predicted.

Oil pipelines, NNPC, Nigeria to have 11 oil and gas pipelines operational by 2023 , Crude oil price drop continues on reports of unexpected inventory build

Oil production in the USA has now declined from 13.1 million barrels per day on March 13 to 11.5 million barrels per day on May 15, according to the EIA, marking a drop of 1.6 million barrels per day. Note that this is more than OPEC’s production cut agreement from last year.

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Note that the API had also reported an increase of 1.120 million barrels of gasoline for the week ending May 22 as against last week’s 651,000-barrel draw. This is more than 10 times the build that analysts had predicted.

The report also stated that distillate inventories were up by 6.9 million barrels for the week, as against last week’s 5.1 million barrel inventories. This is as Cushing inventories fell by 3.37 million barrels.

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Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Macro-Economic News

BREAKING: Nigeria’s inflation rate surges to 18.17% in March 2021

Nigeria’s inflation rate for the month of March 2020, rose to 18.17% from 17.33% recorded in February 2021.

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Nigeria’s inflation rate for the month of March 2020, rose to 18.17% from 17.33% recorded in February 2021.

This is according to the Consumer Price Index report, recently released by the National Bureau of Statistics (NBS).

Food inflation spikes to 22.95% from 21.79% recorded in the previous month, while core inflation, which excludes the prices of volatile agricultural produce rose to 12.67% from 12.38% recorded in February 2021.

 

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Business News

BUA Group, French company announce progress in 200,000 bpd refinery project

This is coming about 6 months after both firms signed an agreement for the supply of process technologies and the design of the facility.

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The BUA Group and Axens, a French-based petroleum technology company, have both signed a progress acknowledgement statement for the proposed BUA multi-billion-dollar integrated 200,000 barrels per day refinery in Akwa Ibom State.

This is coming about 6 months after both firms signed an agreement for the supply of process technologies and the design of the facility.

BUA, while making the disclosure in a statement on Wednesday, April 14, 2021, said that the French President, Emmanuel Macron, commended its Chairman, Abdul Samad Rabiu, for his commitment to developing lasting relationships between French and Nigerian businesses.

READ: What the $1.5 billion Port Harcourt refinery deal means to us – Maire Tecnimont

The statement said that this came as the French Minister for Foreign Trade and Economic Attractiveness, Franck Riester, paid a visit to the BUA Group Headquarters in Lagos where he handed over a personal invitation from Macron to Rabiu to attend the Choose France Summit in June in Paris representing business leaders from Nigeria and Africa.

The French minister also witnessed the signing of a progress acknowledgement statement between BUA Group and Axens of France for the proposed refinery project, according to the statement.

The statement also said that during the visit, it was announced that the BUA chairman had been appointed Chairman of the France Nigeria Investment Club.

READ: FG reacts to reports of revoking 32 refinery licenses

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While thanking the minister and Macron for their unwavering support in bringing BUA and French businesses together, Rabiu said BUA had so far initiated partnerships and had developed personal relationships with a few French businesses, including Axens.

He expressed confidence in the quality of expertise and technical know-how of the French companies BUA had partnered with.

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Rabiu pointed out that the BUA refinery would reduce the huge cost of transporting Nigerian crude offshore, refining it and bringing it back into the country when fully operational.

READ: Abdulsamad Rabiu’s stake in BUA Cement has increased by N1.2 trillion in value since listing in 2020

He said that the choice of Akwa Ibom for the refinery was due to the huge availability of raw materials and its proximity to export petroleum products to regional countries.

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The President of Axens, Jean Sentenac, in his statement, said he was pleased that the project was advancing on schedule and expressed delight for the very good cooperation between all the involved parties, reiterating the commitment of Axens in delivering the BUA Refinery Project on time and with the highest standards.

READ: FG to open LPG distribution channels in all local governments

Bottom line

The completion and take-off of the refinery owned by the BUA Group would come as a huge boost for the Federal Government’s effort to stop the importation of refined petroleum products, ensuring that the country becomes a net exporter of these products.

This will also help to conserve the scarce foreign exchange as the completion and take-off of the Dangote refinery and other similar refinery projects will help ensure self-sufficiency in the country.

The BUA Group, just a few days ago, was listed as one of the companies with an active refinery license from the Department of Petroleum Resources (DPR).

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