Nigerian crude moderately decreased but maintained its premium status as industry data showed a buildup in both crude and fuel inventories in the world’s largest economies.
This is a sign of tepid demand and weak supply expectations ahead of an OPEC+ policy meeting in June.
Brass River and Qua Iboe were down by 59 basis points late Tuesday, trading at $86.53 a barrel. Brent Crude, the major oil benchmark, traded at $82.5 a barrel at the time of writing this report.
Qua Iboe is produced by ExxonMobil using multiple offshore fields and is exported via the Qua Iboe Terminal. Refiners favour this crude because of its low sulfur content and excellent quality.
Both Nigerian oil benchmarks saw a slight decline due to signs of easing supply constraints and a decline in global oil demand, particularly in the U.S.
Oil traders project that there will likely be a decrease in crude oil inventories of roughly 11.1 million barrels in the past week. The actual data is scheduled to be released this afternoon.
Nigerian crude oil prices were also impacted by cautious expectations about production cuts from the Organization of the Petroleum Exporting Countries and affiliates (OPEC+) ahead of a policy meeting on June 1.
Some ship trackers affirm a moderation in Nigerian production as oil exports have also dropped more sharply, partly due to the Dangote refinery receiving more supplies.
Nigeria’s average daily oil production fell from 1.3 million barrels per day in February to 1.2 million barrels per day in March, according to OPEC’s latest figures.
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Meanwhile, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is working to strike a compromise between allowing oil majors to leave the country more quickly and safeguarding the environment, nearby populations, and the assets’ long-term viability.
The Nigerian oil watchdog further stated that large oil corporations, like Exxon Mobil and Shell, who want to withdraw from Nigeria’s onshore oil can receive approval more quickly if they accept accountability for spills instead of waiting for authorities to assign blame.
Gbenga Komolafe, Head of NUPRC, presented the firms with a short-term option that would receive quicker approval if they agreed to clean up spills and compensate local people during a meeting in Abuja.
Exxon, Shell, TotalEnergies, and Eni have all attempted to withdraw from Nigeria’s oil-rich Niger Delta in recent years to concentrate on deepwater drilling, claiming security problems such as theft and sabotage. Regulatory obstacles have, however, caused their exits to be postponed.