Africa’s most populated country is set to draw the battle line with OPEC+ and its allies as Africa’s largest oil producer aims for higher oil output, despite Crude prices falling in the past month as hopes of more supply cuts by the oil cartel were largely offset by a delay in the meeting.
Brent crude prices fell to $80 a barrel in the early hours of Monday despite a weaker reading in the dollar index, while U.S. West Texas Intermediate crude futures were down 0.5% at $75 a barrel.
Expectations that OPEC+ would discuss plans to reduce further and that Saudi Arabia and Russia could extend voluntary supply cuts into early 2024 supported a modest increase in both contracts last week, marking their first weekly rise in five.
The black viscous hydrocarbon plummeted in the middle of last week following the postponement of a ministerial meeting by OPEC+, the Organization of the Petroleum Exporting Countries, and their allies, which includes Russia.
OPEC and their allies, including Russia, delayed an all-important ministerial meeting to the last day of this month in order to resolve disagreements over output targets for African producers, which sent prices down in the middle of last week.
Angola and Nigeria, two African members of the OPEC+ producer group, want to increase their oil production to support their ailing economy, over 80% of Nigeria’s national income comes from crude oil.
Latest macro data shows some positivity in Nigeria’s energy sector. NBS data highlighted that Africa’s largest economy oil and gas sector moderated by 0.85% in the third quarter, a big improvement from the 13.43% contraction recorded in the third quarter in 2022
Nigeria is the source of the well-known Bonny Light crude, a light-sweet crude oil grade that serves as a benchmark for the production of crude oil throughout West Africa. the country’s grade is known for exceptionally high gasoline yields, Bonny Light is a preferred oil among American refiners, especially those located on the East Coast.
Apart from that, as of October, Angola is not producing as much as it is scheduled to in 2024, based on data from OPEC. Nigeria is producing less than its OPEC-verified 2024 output goal and nearly reaching its 1.38 million barrels per day allotment.
However, the most recent data from FG officials stated that the country was producing 1.7 million barrels of crude and condensates per day as of November 17, and by the end of the year, it hopes to reach 1.8 million barrels per day.
OPEC’s June conference saw the lowering of targets for several member countries, especially Nigeria and Angola, following years of not fulfilling the prior standards.
The latest price action at the crude oil futures market highlights that after testing the EMA50 in the preceding sessions, the price of crude oil bounces back bearishly to maintain the intraday and short-term bearish trend, which initially aims to surpass the $80 per barrel price levels.
It is noted that dropping below this level will prolong the bearish wave to reach $78-$75 a barrel
However, the bears’ price needs to hold below $78 a barrel to ensure the continuation of the bearish wave.
But before the next phase lowers, possibly a move to $80 per barrel (or perhaps $82) can be made if prices can hold support today and break over $78 a barrel.
Given the disagreement over production limitations within OPEC+, experts predict that market sentiment will remain negative, even if they anticipate Saudi Arabia to continue its further voluntary cut of one million barrels per day into 2024.
In the oil futures market, short sellers are wagering that the United Arab Emirates will increase its exports of its flagship Murban crude soon.
This is because barrels are being diverted to the international market due to refinery maintenance, and a new OPEC+ mandate.
Conversely, the oil leak from TotalEnergies’ offshore Egina Floating Production Storage and Offloading (FPSO) vessel on November 15 resulted in the loss of about 3,000 barrels of crude oil, temporarily distorting the demand/supply dynamics in Nigeria’s oil market
The FPSO, which is 130 KM off the coast of the Atlantic from Port Harcourt, can produce 200,000 barrels of crude oil per day and hold 23 million barrels on board.
The National Oil Spills Detection and Response Agency’s (NOSDRA) director general, Mr. Idris Musa, informed the News Agency of Nigeria on Sunday that the spill’s cleanup was still ongoing.
