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Commodities

International Oil price rebounds

Brent crude futures rose by 60 cents or 1.4%, to close at $42.32 per barrel.

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Crude oil prices slump, as partial lockdowns resume

There is a flicker of hope for the international oil price as the London Oil prices rebounded on Tuesday, drawing support from robust China data. Although, concerns about waning demand elsewhere and supply resumptions in Norway, the Gulf of Mexico, and Libya were weighed.

READ: Soybean Futures reach 2-year high, following U.S sales to China 

Brent crude futures rose by 60 cents or 1.4%, to close at $42.32 per barrel while the West Texas Intermediate (WTI) crude futures rose by 63 cents or 1.6%, to close at $40.06 per barrel.

China, the world’s top crude oil importer, took in 11.8 million barrels per day (bpd) of oil in September, up 5.5% from August and up 17.5% from September last year.

READ: Seplat Petroleum has declared a PAT of N81.11bn for 2017

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What they are saying

According to Commerzbank, “Currently, oil demand is driven primarily by China,” and according to IEA Chief, Fatih Birol, “The era of global oil demand growth will come to an end within the next 10 years, but in the absence of a large shift in government policies, I don’t see a clear sign of a peak.”

S&P Global Platts Analytics estimates Libyan crude supply could return to 500,000 b/d this month but warned that “longer-term stability remains uncertain.”

READ: Oil Prices jump after Trump provides updates on trade-war

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READ: National Assembly ready to pass 2021 Budget before end of 2020 – Senate President

What you should know

  • Workers have been returning to the U.S. Gulf of Mexico platforms after Hurricane Delta and Norwegian workers to offshore rigs after ending the strike, while OPEC member Libya on Sunday lifted force majeure at its Sharara oilfield.
  • Libya’s state-owned National Oil Corp (NOC) on Oct.11 lifted force majeure on Sharara, the country’s top-producing oil field, and restarted pumping as the OPEC producer continues to restore its energy industry following the Libyan National Army’s end of a nine-month blockade in September.
  • NOC received assurances from the Petroleum Facilities Guard, linked to the self-styled LNA (Libyan National Army), that it will end security violations and remove hurdles to allow the national oil company to lift force majeure and resume operations at the field, the company said in a statement.
  • Libya’s total output on Monday was expected to hit 355,000 bpd. A full return of the 300,000 bpd Sharara field would nearly double that.
  • Libya holds Africa’s largest proven reserves of oil and its main light sweet Es Sider and Sharara export crudes yield a large proportion of gasoline and middle distillates, making them popular with refineries in the Mediterranean and Northwest Europe.

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Commodities

Crude oil prices drop by over 5%

Crude oil prices dropped more than 5% and falling below the key $40 per barrel support, at the American trading session mid-week

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CRUDE OIL, U.S Shale, Naira under pressure, as crude oil hits $25 per barrel, Oil Price: A dead cat bounce in the making?, Bears tear Crude oil futures into shreds as Brent slumps more than 20%

The slide is attributed to unexpectedly large U.S. crude oil inventories for last week reported by the government, which reinforced concerns about depleting demand for fuel amidst the worsening global outbreak of Covid-19.

At the time of writing, Brent crude traded at $39.44/Barrel down more than 5%.

Why crude oil prices are falling heavily now?

The macros weighing down on oil prices are reports coming from the EIA showing U.S. crude stockpiles gained 4.3 million barrels, against an increase of 1.23 million barrel as anticipated by energy analysts, showing there is soft demand for gasoline in the world’s largest economy.

 

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Commodities

What next for Oil amid rising COVID-19 cases?

The market is feeling pressure amid rising COVID-19 cases in the United States and Europe, and also due to Libyan oil production.

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OPEC+ Alliance, US, Russia, Canada, Mexico reach historic deal to cut 13.4 million bpd, Oil market still uncertain over the OPEC+ deal as prices react positively, 7 oil producing countries most affected by covid-19, see where Nigeria is placed

Crude futures fell 1.9% in New York on Friday and posted their first weekly decline in three, according to Bloomberg. Libya lifted force majeure on its Ras Lanuf and Es Sider ports and oil output will surpass 1 million barrels a day in four weeks, according to the state-run National Oil Corp. A further increment in Libyan oil production will lead to more supply to an oversupplied market that is wrestling with a pandemic-induced sales decline.

This declaration comes in the wake of the ongoing tussles in the North African region, which marked a lasting truce arrangement.

READ: OPEC+ to reduce production cuts in August to 7.7 million barrels a day

Finance Minister, Faraj Boumtari, told Al-Jazeera that in recent years, the regular oil barricades in Libya have cost the nation a sum of US$130 billion in lost incomes.

The truce in Libya is just going to empower more production there and keep it consistent for some time, as the COVID-19 circumstance is not generally improving. Libya’s oil industry has been tormented by battles, as opponent groups have been battling for authority over zones in Libya and its oil terminals and ports since the overturning of Muammar Gaddafi in 2011.

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READ: Libya’s output could destabilise OPEC’s cuts and affect crude prices

In other news, Russia downplayed the likelihood that OPEC+ could expand its present 7.7 million barrels everyday production cuts in one year from now, as per Russian President Vladimir Putin. The remarks could be only jawboning to a market that is urgently looking for consolations that oil production will not increase excessively. However, Russia has in the past been hesitant to keep up its part of the oil production cuts; So, any notice that it is contemplating a slower tightening of the cuts is critical.

Russia had neglected to cut its own oil production to the level it consented to in 2019 and mid-2020. Given how oil production in the United States bounced back two weeks ago, however, it was still down from its March 13 high of 13.1 million bpd. U.S. oil production presently sits at 10.5 million bpd – 2.6 million bpd under those March highs, as indicated by the Energy Information Administration –

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READ: 4 key reasons why Brent crude might slip back to $35 per barrel

China has assumed a critical function in supporting global oil demand as of late, by bringing in its most volumes since May. In contrast, there is a slow recovery in the remainder of Asia and poor refining margins. But how long would China be able to help the fragile global oil market, when demand outside China is weak, with the second wave of COVID-19 contaminations wrecking world economies.

In recent months, China’s unrefined petroleum imports have not fallen under 11 million barrels per day (bpd), with June orders of 12.9 million bpd crushing the past record from May by more than 1.5 million bpd. The market is feeling pressure amid rising COVID-19 cases in the United States and Europe, and also due to Libyan oil production.

READ: Oil supply feared to drop by 3%, as new cases of COVID-19 infections increase

A few U.S. states detailed daily record increments in COVID-19 infections on Thursday, raising worries about future gasoline interest, while France extended curfews as the second wave of the pandemic compasses across Europe.  Oil prices rose last week when the House Speaker, Nancy Pelosi, spoke about the possibility of a stimulus package.

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Commodities

Oil supply feared to drop by 3%, as new cases of COVID-19 infections increase

Growing concern that oil supply could fall by 3% continues as a result of increasing cases of COVID-19 in the US and Europe.

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Crude oil prices slump, as partial lockdowns resume

There is a growing concern that oil supply will fall by 3%, escalating last week’s losses as a result of growing cases of COVID-19 in the United States and Europe.

This has raised worries about the market conditions – the demand and supply of crude oil. The United States reported its highest number of new coronavirus infections in two days – Saturday inclusive, while in France, new cases hit a record of more than 50,000 on Sunday, underlining the severity of the outbreak.

On the supply side, Libya’s National Oil Corp on Friday ended its force majeure on exports from two key ports and said production would reach 1 million barrels per day (bpd) in four weeks, a quicker ramp-up than many analysts had predicted.

OPEC+, a grouping of producers including the Organization of the Petroleum Exporting Countries (OPEC) and Russia, is also set to increase output by 2 million bpd in January 2021, after cutting production by a record amount earlier this year.

What you should know

Recently, Nairametrics reported that the oil prices had continued to decline as a result of worsening COVID-19 pandemic cases which are threatening to bring more restrictions on movement and consumption and ultimately hit demand for crude products.

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What they are saying

According to Avtar Sandu, Senior Manager of Commodities at Phillip Futures in Singapore, “New barrels of Libyan oil come at a time when the crude oil market had just faced the disappointment from the recently concluded OPEC+ ministerial panel, when the organization made no new policy proposals.”

Last week, Russian President, Vladimir Putin, indicated he may have to agree to extend OPEC+ oil production reductions if that could be beneficial in stabilizing the market.

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