Connect with us


OPEC and Alliance Output Cut are not enough to mitigate Brent’s Oversupply Issues

Brent crude still needs to deal with its oversupply issues before it can successfully move on with its current price range of $40 and $50 per barrel.  



Crude oil prices rally as investors remain optimistic about oil production cut ,Brent Crude continues to rally as businesses resume around the world, Brent crude,, Petrol: OMCs to resume importation of Petrol, Crude oil prices drop, geopolitical tension strengthens, OPEC and Alliance Output Cut are not enough to mitigate Brent’s Oversupply Issues, Brent crude falls, global investors fear strengthened on resurgence of COVID-19 cases, Brent crude drops, as COVID-19 caseloads rise in the world’s largest economies

Oil has witnessed several challenges ranging from uncertainties over demand as a result the coronavirus pandemic as well as crude oversupply. As a result of partial easing of the lockdown in many parts of the world, oil prices have started to witness a partial recovery.

However, director and analyst from Westwood Global Energy Group, Thom Payne, has noted that Brent crude still needs to deal with its oversupply issues before it can successfully move on with its current price range of $40 and $50 per barrel.

His comments came after a recent agreement by the Organization of the Petroleum Exporting Countries (OPEC) as well as efforts by an oil-producing alliance to extend a historic oil production slash until the end of July 2020. The alliance had cut production by 9.7 million barrels per day at the start of May 1. While the cut had helped improve crude prices in the last two months, he explained that there is still a need to drain the current oversupply, which had hit 14 million barrels a day, before prices can move materially above the stated $40 to $50 per barrel price structure.

His comments came after the group, known collectively as OPEC+, on Saturday had agreed to extend its record oil production cut for another month towards balancing the needs of the global oil market. In the afternoon of Asian trading hours on Monday, Brent rose by 1.49% to trade at $42.93 per barrel. Also, U.S. crude futures  gained 1.34% to trade at $40.08 per barrel.

Speaking on the outlook of the market, he explained that “What’s likely to happen is that the oil markets move to a net draw or undersupply position by around July, August of this year and this would be very supportive of the current $40-50 per barrel price range for Brent.” This assumes that the demand scenario that OPEC attains plays out the way they have put it. However, he notes that the possibility of 100% compliance might be somewhat optimistic.

GTBank 728 x 90

(READ MORE:May Output Cut: OPEC+ records 86% compliance as Nigeria beats expectation)

Commenting on the recent OPEC+ agreement and the outlook of the market, JPMorgan’s Head of Asia Pacific Commodities Research, Scott Darling, noted that JPMorgan sees Brent at $40 dollars per barrel this year and $47 per barrel for next year.

Coronation ads
Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Nigeria imported over 55% of cooking gas consumed in October 2020

55.47% of cooking gas consumed by Nigerians in October 2020 was imported, according to a recent report by the PPPRA.



Nigerians paid less to refill cooking gas in October - NBS report

Nigeria imported 55.47% of cooking gas, known as Liquefied Petroleum Gas (LPG), consumed in October 2020, with the remaining 44.53% sourced and supplied locally.

This is according to the monthly LPG supply data, provided by the Petroleum Products Pricing Regulatory Agency (PPPRA). The data confirmed steady growth in the import of LPG, compared with the previous month (19.6%) and the corresponding period of 2019 (13.2%).

  • Data released by the PPPRA indicated that the total quantity of LPG both imported and sourced locally in October 2020 was 123.27 thousand Metric Tonnes in Vacuum (MT (Vac)).
  • Out of this, 68.37 thousand MT (Vac) was imported, and 54.90 thousand MT (Vac) was sourced locally.

(READ MORE: EndSARS: A day by day timeline of the protest that has brought Nigeria to its knees)

  • Imports grew by 19.6% in October, compared with September and by 13.2% compared to the corresponding period of 2019.
  • On the other hand, LPG sourced locally declined by 30.8%, compared with the previous month. However, it grew significantly by 219.3% compared with the corresponding period of 2019.
  • NIPCO, with Port of Discharge at BOP, Apapa and PWA, Lagos, was the highest importer of the commodity into the country in October 2020, with 32.67 thousand MT (Vac) of LPG, representing 47.8% of the total import and 26.5% of total LPG supplied in the period under review.
  • The other importers, according to the data, includes Matrix Energy, 12.46 thousand MT (Vac); Algasco LPG Services Limited, a subsidiary of Vitol, 13.82 thousand MT (Vac); Prudent, 5.63 thousand MT (Vac); and Hyson, 3.80 thousand MT (Vac).
  • The origin of the imported LPG was the USA and Equatorial Guinea. The USA supplied 50.27 thousand MT (Vac), representing 73.5%, while Equatorial Guinea supplied 18.10 thousand MT (Vac), representing 26.5%. Imported LPG was discharged at BOP, Apapa; Matrix Jetty, Warri; PWA, Lagos, and Prudent Energy Jetty, Oghara.

(READ MORE: FG gives reasons for fuel subsidy removal, discloses alternative to kerosene)

  • NIPCO was responsible for 26.42 thousand MT (Vac) of the total 54.90 thousand MT (Vac) sourced locally in October 2020; Algasco sourced 13.20 thousand MT (Vac); Stockgap Fuels Limited sourced 8.19 thousand MT (Vac), and Rainoil sourced 7.08 MT (Vac).
  • The origin of the locally sourced LPG was NLNG, Bonny and BRT. NLNG supplied 47.82 thousand MT (Vac), representing 87.1%; while BRT supplied 7.08 thousand MT (Vac) representing 12.9%. Local LPG was discharged at PWA, Lagos; Rainoil Jetty, Lagos; Lister Jetty, Apapa; and Stockgap Jetty, Port Harcourt.

What this means

GTBank 728 x 90

The 30.8% decline in local supply compared to the previous month is particularly worrying, considering the huge proven gas reserves in the country estimated at over 200 trillion cubic feet.

However, the 219.3% increase compared to the corresponding period in 2019 may mean that all is well. The 55.1% increase in locally sourced LPG from 35.40 thousand MT (Vac) in August to 54.90 thousand MT (Vac) in October 2020 appears to further confirm there may be no cause for alarm.

Notwithstanding the improvement, the country needs to make concerted efforts towards developing facilities and capabilities needed to improve local production of LPG, since it has abundant gas reserves.

Coronation ads

What you should know

It may be argued that efforts are being made towards improving on what is currently obtainable. In this context, Nairametrics reported that the country has increased its LPG storage capacity to 69,968 Metric Tonnes. The latest addition being the 8,400 MT Tonnes capacity built by Techno Oil in Kirikiri, Lagos.

Continue Reading


Buhari to commission phase 1 of brand new refinery this week

President Buhari is set to commission the first phase of a new petroleum refinery located in Imo State.



Buhari to commission phase 1 of brand new refinery this week, Petroleum Industry Bill, revenue, FSDH, Buhari to release N600 billion for capital expenditure in 3 months, Nigeria @ 59: President Muhammadu Buhari’s speech, Buhari’s Budget of Sustaining Growth & Job Creation (Full text) , See what FSDH is saying about the 2020 budget and FG’s revenue drive , Nigeria recoups N594.09 billion from whistleblowing policy in less than 3 years , Buhari seeks speedy approval of the 2016/2018 external borrowing plan , Finance Bill to use banks as agents to tax Nigerians , FG battles 6 oil firms for failure to remit N20 trillion , President Buhari receives 2020 budget, fear of padding to delay assent , Nigeria’s Budget Spending Under Buhari Still Under 2013 Levels 

President Muhammadu Buhari is expected to commission the first phase of a brand new petroleum refinery, which is located at Ibigwe, Imo State and owned by oil and gas integrated firm, Waltersmith Limited, this week.

The Federal Government holds a stake in the refinery, following an investment by the Nigerian Content Development and Monitoring Board (NCDMB).

READ: Leo Stan Ekeh, the whiz who launched Nigeria’s first locally manufactured computers

This disclosure was made by the presidency through a tweet post on his official Twitter handle on Sunday, November 21, 2020.

The presidency in its tweet post said, “This week President Muhammadu Buhari will commission the first phase of a brand new petroleum refinery by WalterSmith Limited, located at Ibigwe in Imo State. The Nigerian Government holds a stake in the refinery, following an investment by NCDMB.”

GTBank 728 x 90

READ: Irate Nigerians drag Imo State Governor for snubbing Innoson Vehicles

The phase 1 of the project is the delivery of 5,000 barrels per day (BPD) Modular capacity refinery that is strategically located near the existing flow station and will process the circa 6,000 barrels of oil equivalent per day (boepd) currently produced by the upstream business to the readily available market in the south-eastern part of Nigeria.

This is expected to contribute about 271 million litres of refined products including Diesel, Naptha, HFO and Kerosene annually to the domestic market and create both direct and indirect jobs particularly within the host communities.

Coronation ads

READ: Dangote urged to extend investments to Tanzanian oil industry

The second phase is the delivery of 25,000 BPD crude and condensates refinery; an upgrade on the 5,000bpd modular refinery.

The project is still at an early stage of development but is designed to produce the following products: gasoline, diesel, LPG, kerosene and aviation fuel.

READ: CAC to implement new technology for business registration, customers to print certificates

This is a huge boost to the Federal Government’s efforts to increase the country’s refining capacity of petroleum products and stop its importation.

Jaiz bank ads

Apart from the 650,000 barrels per day Dangote refinery that is expected to come on stream, there are several other modular refineries that are expected to take off.

Stanbic IBTC

READ: CBN grants licenses to 3 Payment Service Banks

Explore Data on the Nairametrics Research Website

Continue Reading


NNPC to declare dividend in 2020 despite Covid-19 pandemic

NNPC GMD has said that he is hopeful that the corporation will declare dividends in 2020.



FG to give up majority stakes in its 4 refineries, to be privately managed, NNPC, Pipeline Vandalism: Stakeholder collaboration, critical to tame menace - Kyari, Nigeria explains when it will fully comply with OPEC+ output cut

The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mele Kyari, has said that he is hopeful that the corporation will declare dividends in 2020, despite the challenges posed by the outbreak of coronavirus pandemic.

According to a statement from NNPC’s Twitter handle, this was disclosed by Kyari while speaking at an interactive session with the National Association of Energy Correspondents (NAEC), in Abuja on Friday.

READ: Another insurance firm blames COVID-19 for late filing of financial report

He said, “Our vision is that NNPC will become a company of excellence and declare dividends to Nigerians and shareholders. We are optimistic that at the end of 2020, NNPC will declare dividends to Nigerians in spite of the impact of the COVID-19 pandemic.

Mr Kyari said that accountability and transparency were key to turning NNPC into an efficient and profit-oriented enterprise.

GTBank 728 x 90

He said that it was what informed the decision of the corporation to publish its operational and financial reports monthly.

READ: Senate to investigate CBN over non-remittance of over N20 trillion stamp duty charges

Mr Kyari said: “NNPC has never published its audited financial statement in 43 years. We came and started doing that and released the 2018 financial statement. We were not afraid of doing that and there were a lot of criticisms that we lost money in refinery operations and pipeline business.

Coronation ads

“We went ahead and published the 2019 audited report and was [sic] able to learn and cut cost and became more efficient. There is no company in the country which has cut its losses within one financial year by N800 billion. We have improved efficiency by cutting 97% in our losses.

READ: NNPC releases audited financial statements, refineries record losses of N154 billion

“These are truly difficult times for our industry. But I am proud to say that we’re able to maintain our obligations to the Federation Account for seven months without any fail despite the huge impact of the Covid-19 pandemic on the oil and gas industry,” he said.

This appears to be a departure from the past when the meeting of the Federation Accounts Allocation Committee between the Federal Government and State Governments were sometimes stalled due to disagreements over alleged non-remittance of some funds to the Federation Account by the NNPC.

READ: Banks defy headwinds, earn more than N260 billion profits in Q1 2020

Jaiz bank ads

Stanbic IBTC


Continue Reading