Connect with us
SSN
Advertisement
IZIKJON
Advertisement
UBA
Advertisement
forex
Advertisement
Stanbic IBTC
Advertisement
Binance
Advertisement
Esetech
Advertisement
Patricia
Advertisement
Fidelity ads
Advertisement
app

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.

Published

on

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.

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 –

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.

Binance

Dapo-Thomas Opeoluwa is an Investment Banker and Energy analyst. He holds a degree in MSc. International Business, Banking and Finance from the University of Dundee and also holds a B.Sc in Economics from Redeemers University. As an Oil Analyst at Nairametrics, he focuses mostly on the energy sector, fundamentals for oil prices and analysis behind every market move. Opeoluwa is also experienced in the areas of politics, business consultancy, and investments. You may contact him via his email- [email protected]

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.

Commodities

Oil prices gain, pressure remains over strong U.S dollar

Brent crude futures surged by 0.74% to $68.50 a barrel falling below the $70 mark after jumping past it on Monday.

Published

on

global oil market, Bonny Light and Brent crude oil, Arthur Eze, Nigeria cuts crude oil production to 1.77mbpd, Nigeria wants international oil companies to pay up now , OPEC+ deal gets a boost as Russia and Saudi Arabia consider further output cut, 4 key reasons why Brent crude might slip back to $35 per barrel, How substantial is compliance for the Oil market?

Crude oil prices rebounded strongly at the second trading session of the week after Monday’s most recent rally running out of steam, as the greenback strengthened and made commodity assets in the greenback more expensive.

At the time of writing this report, Brent crude futures surged by 0.74% to $68.50 a barrel falling below the $70 mark, after jumping past it on Monday.

Oil traders heaved a sigh of relief after the Saudis disclosed that Sunday’s attack on a storage tank farm at the Ras Tanura terminal was successfully neutralized and there was no direct impact on oil production.

READ: Oil gains 15% in February, as Saudi Arabia’s output curbs help

Recall a few days ago, Yemeni Houthi rebels attacked the Saudis’ oil terminal, which is capable of producing 6.5 million barrels a day. It was the most serious threat the world’s leading OPEC’s exporter had faced since September 2019, when a key oil facility and two oil fields came under siege.

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, broke down the macros pushing oil prices down, taking to account that the dollar and U.S Treasury yields seem to be taming oil bulls’ upside.

“Oil prices fell on Monday, hours after an early sharp price rise caused by a drone attack on Saudi oil infrastructure which missed their mark.
There has also been a change in music over the past 24 hours as oil falls on the back of a stronger US dollar.

“Traders also come to terms with some of the National People’s Congress (NPC) takeaways that revolved around less credit and stabilization in Chinese markets’ leverage.

“All the while, higher US yields continue to tighten financial conditions tempering the reflation trade, triggering more profit-taking from cross-asset players that were using oil as a speculative reflation hedge.”

READ: Oil gains 15% in February, as Saudi Arabia’s output curbs help

Bottom Line: Oil macros however remain incredibly supportive, especially with Saudi Arabia in full control and pursuing a tight oil policy.

Continue Reading

Commodities

Oil prices soar above $70 a barrel over terrorist attacks on Saudi’s oil station

Brent crude futures were up by more than 2%, trading at $70.84 a barrel in early Asian trade, the highest since Jan. 8, 2020

Published

on

Oil prices jumped past the $70 a barrel price level, at the first trading session of the week for the first time since the worst pandemic in human history began, while U.S. crude touched its highest price level in more than two years, on reports of terrorist attacks on Saudi Arabia’s facilities.

At the time of writing, Brent crude futures were up by more than 2%, trading at $70.84 a barrel in early Asian trade, the highest since Jan. 8, 2020, while U.S. West Texas Intermediate (WTI) crude for April surged by 2.4%, to $67.69, the highest since October 2018.

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave critical insights on why oil prices are hovering high amid the terrorist attacks on OPEC’s leading oil producer’s facilities capable of squeezing supplies momentarily.

READ: How Nigeria can make more money from Oil

“Oil prices have spiked higher this morning after Iran-backed Houthi rebels unleashed a coordinated attack on Saudi Arabia’s oil facilities and military bases.

“With OPEC pursuing a tight oil policy and US shale oil inelastic supply response to higher prices, any disruption to the Middle East supply chain could shoot oil prices considerably higher.

“Indeed, this could be the flashpoint that ignites that smoldering Middle East powder keg as apparent lines in the sand got crossed when the attacks targeted civilians.”

READ: FG proposes new taxes on petroleum products, beverages, telecommunications

Bottom line: Although recent reports reveal there have been no reports of significant damage or oil supply chain disruptions, this is an evolving story that will keep oil traders on their toes thereby keeping oil prices north at least for the near term.

Continue Reading



Advertisement





Nairametrics | Company Earnings

Access our Live Feed portal for the latest company earnings as they drop.