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Commodities

Oil plunges as worries over demand outweigh tighter supply

OPEC+ has not decided on whether to extend the record supply cut of 9.7 million barrels per day.

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Oil plunges as worries over demand outweigh tighter supply

Oil prices dipped on Monday following concerns over a record rise in coronavirus infections globally. This could lead to a stall in the recovery of fuel demand, thereby outweighing tighter supplies from major producers across the world.

Brent crude (LCOc1) fell by 0.2%, to $42.04 a barrel by 0655 GMT, while U.S. crude (CLc1) was at $39.72 a barrel, down by 0.3%. Both contracts rose about 9% within the past week and Brent crude futures have entered backwardation, meaning that oil required for immediate delivery now costs more than the oil to be provided later. This is typically an indication of tightening supply.

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Howie Lee, an economist at Singapore’s OCBC Bank explained that “The market has entered a slight backwardation up to October. It times in with some of our estimates that by around November, the market could get really tight. I find it more difficult for oil to move higher at this point, especially with the growing concern about second-wave contagion.”

The World Health Organization announced a record increase in global infections yesterday, Sunday, with the biggest increase seen in North and South America.

READ MORE: Nigeria’s external reserve drop by $261 million in 15 days, oil firms to sell forex to CBN

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Last week in the United States and Canada, the number of operating oil and natural gas rigs fell to a record low. This is even as higher oil prices led to a number of producers to start the drilling process again.

The OPEC+ group, which consists of OPEC countries as well as its allies, including Russia, have not decided on whether to extend the record supply cut of 9.7 million barrels per day in August, making it the fourth month.

Other spikes in virus infections in certain regions like the Chinese capital of Beijing and Australia’s second-most populous state, Victoria, have also led to further restrictions on movement to limit the spread.

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Commodities

OPEC+ asks Committee to monitor Nigeria, others over extended oil production cuts

OPEC expects the increase in supply to be offset by countries like Nigeria

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Worry for Nigeria as forecast shows OPEC countries will face a challenging 2020 , Why OPEC may not change output cut soon, Weaker oil demand overshadows proposed OPEC output cuts, as oil price dips , Nigeria tops compliance list, as OPEC’s December crude output drops, OPEC, Russia planning biggest oil cut ever, OPEC+ output cut: The oil cartel records 86% compliance as Nigeria beats expectation, OPEC+ asks Committee to monitor Nigeria, others over extended oil production cuts

The Organization of Petroleum Exporting Countries (OPEC) and its sister members have asked the Joint Technical Committee (JTC) to monitor underperforming members in the extended production cuts.

The body also requests that all underperforming nations including Nigeria, Iraq and others submit their plans for implementation of the “required compensation” for the month of June to the Secretariat by the end of the month.

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This was revealed in the recent 20th virtual meeting of the Joint Ministerial Monitoring Committee (JMMC). The body also commended Gulf nations like Saudi Arabia, Kuwait and the United Arab Emirates for making voluntary cuts to their production to keep the price stable. Oil production reached its lowest in nearly 30 years due to the production cuts of 9.6 million barrels.

Meanwhile, the Organization plans to reduce its production cut from 9.6 million barrels a day to 7.7 million barrels, OPEC expects the increase in supply to be offset by countries like Nigeria that did not meet full compliance on production cuts. Nigeria will join Iraq and Angola by engaging in a further 842,000 barrels a day of cuts through September.

READ MORE: OPEC launches Annual Statistical Bulletin (ASB)

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OPEC agrees that a full 100% conformity for all members is fair deal, that is important to move the body to a unified voice in the future and deliver on long term goals. Adding that despite partial lockdowns, the recoveries in demand is clear. Adding that the extra supply from the ease in productio9n would be consumed locally be oil exporters as their economies reopen for business.

OPEC agrees that the new compensation policy was agreed by the nation affected and would lead to deeper level of adjustments.

 

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Commodities

Crude oil prices drop, major oil powers to ease record oil supply curbs

Brent crude lost about 0.59%, to trade at $43.52 per barrel by 05.33 am GMT.

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Brent crude drops to $25, oil demand drops by about 10% of world’s consumption, Brent Crude Oil hits $26, as Nigeria's Sweet Crude demand falls, Oil price pushes up before OPEC meeting, Asian equity markets mixed, NIGERIA OIL: Darker days ahead as Brent falls below production cost, Brent crude drops, as oil traders focus on OPEC+ meeting

Crude oil prices dropped on Thursday morning at London’s trading session, after OPEC’s leading allies agreed to alleviate record supply curbs of crude from next month. Although the plunge in crude oil prices got softened by the recent drawdown in U.S crude oil inventories.

Brent crude lost about 0.59%, to trade at $43.52 per barrel by 05.33 am GMT, and West Texas Intermediate (WTI) crude lost about 0.72%, to trade at $40.90 per barrel.

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READ MORE: Avoiding or mitigating recession in post COVID Nigeria – Olisa Agbakoba

The Organization of the Petroleum Exporting Countries (OPEC) and its allies have agreed to increase crude oil supply starting from next month, as demand continues to rise to pre-pandemic levels.

OPEC+ agreed to reduce the daily production cut from 9.6 million barrels a day to 7.7 million barrels a day from August. The reduction in cuts was backed by both Saudi Arabia and Russia, including other participating oil ministers in the virtual conference.

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“Some investors took profits after the OPEC+ decision, but a big draw in U.S. crude provided some support,” Kazuhiko Saito, chief analyst at Fujitomi Co said.

READ MORE: Why Nigeria’s banking stocks performed well in May

In addition, Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, spoke about the sentiments oil traders are presently having. He said:

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“Despite the increase in COVID-19 cases and lockdown restrictions in individual states, US oil demand recovery continues.

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“Traders expect the market to tighten over the second half of 2020, so the peak for US oil inventories may be behind us. However, there is a risk that the restart of shut-in wells could put upward pressure on US crude stocks in the near term.”

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Commodities

OPEC launches Annual Statistical Bulletin (ASB)

The ABS would be a platform for reliable research data for analysts and policy stakeholders. 

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OPEC, Historic OPEC+ oil deal still under threat as negotiations drag, New OPEC+ output cut proposal stalls due to Russia, OPEC launches Annual Statistical Bulletin (ASB)

The Organization of Oil Exporting Countries (OPEC) has launched a bulletin to track data statistics of its members in the industry and other key economic indicators.

OPEC says that the ABS would be a platform for reliable research data for analysts and policy stakeholders.

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“The Annual Statistical Bulletin (ASB) contains about 100 pages of tables, charts and graphs detailing the world’s oil and gas reserves, crude oil and product output, exports, refining, tankers, plus economic and other data” the body said.

Comprising of important current time data of the oil production industry, from production to demand and import/exports, including oil transport tracking.

OPEC announced the initial launch report will provide data on oil and gas activities of 13 countries including Nigeria and Algeria, Angola, Congo, Equatorial Guinea, Gabon, IR Iran, Iraq, Kuwait, Libya, Saudi Arabia, the UAE and Venezuela.

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OPEC announced that the ASB would come with an interactive version on iOS and Android to optimize the valuable research data on the platform.

READ MORE: OPEC production output now at lowest level in nearly 30 years

OPEC Secretary-General, Dr Mohammed Barkindo said the body is dedicated to high-quality data transparency to provide timely oil and gas metrics for analysts.

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“This underpins OPEC’s overarching goal of fostering sustainable oil market stability for the benefit of producers, consumers and the global economy,’’ he added.

OPEC’s Head of Data Services Department, Ms Boshra AlSeiari, provided timely data from the ASb saying global demand grew 0.9% year on year with an average of 99.67 Million BPD in 2019, adding that the largest growth came from Asia (China and India in particular), Africa and the middle east.

“Total world crude oil production declined in 2019 by 0.56 million barrels/day (mb/d), or 0.7%, as compared to 2018, to average 75.26 mb/d, following a historical high during 2018.

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“OPEC crude oil production declined sharply year-on-year by 1.86 mb/d, or 6.0% while crude production by non-OPEC countries grew by 1.30 mb/d, or 2.9 per cent.

 “OECD oil demand fell slightly in 2019, while oil demand in OPEC member countries returned to growth in 2019,’’ AlSeiari said.

She also added that total exports from members averaged 22.48 million barrels per day in 2019, decreasing 7.4% from 2018 by 1.80 million barrels per day. She added that oil reserves of OPEC nation increased 3.7% in 2019 to 1,227 billion barrels and capacity to refine grew by 1.21 million barrels per day at 100.98 million by 2019.

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 “World proven crude oil reserves stood at 1,551 billion barrels (bn b) at the end of 2019, increasing by 3.6% from the level of 1,497 bn b recorded at the end of 2018,” she said.

 

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