Nigerian crude contracts were little changed on Friday but were set to rise for a second week amid signs of improving demand and tight supply, despite an uptick in the dollar’s value.
Nigerian oil contracts, including Brass River, Bonny Light, and Qua Iboe, traded at $87.36 per barrel, while Brent futures for August settlement traded at $85.56 per barrel following an 80-basis point increase in the previous session.
Price action affirms that oil bulls remained unfazed despite the dollar index’s overnight spike of 41 basis points, which erased the greenback’s weekly losses, in the wake of the Swiss National Bank’s second consecutive rate decrease and indications from the Bank of England of a reduction in August.
The US dollar and oil usually have a negative correlation, meaning that rising dollar values are typically accompanied by falling oil prices and vice versa.
Tight Supply
The Nigerian energy company Aiteo announced it had discovered a leak and had stopped producing oil at its Nembe Creek facility, which has a production capacity of about 50,000 barrels per day.
The leak was discovered on Monday during routine operations in the Nembe area of Nigeria’s oil-rich Bayelsa state, according to Aiteo Eastern E&P. After decades of spills that have harmed farming and fisheries, this area is among the most contaminated regions on Earth.
The Nembe Creek facility, under an oil mining lease operated by Aiteo, is the largest of 11 fields. It also generates significant volumes of natural gas that fuel the Nigeria LNG plant at Bonny Island.
Since the beginning of the month, oil prices have increased by around 5%, reaching their highest point in more than seven weeks.
The newest EIA statistics, the escalating conflict between Israel and Hezbollah, and the hurricane season have contributed to the oil market’s fundamental gains, which might continue to strengthen prices into the summer.
U.S. government data issued on Thursday highlighted that total product supplied, a measure of the nation’s demand, increased by 1.9 million barrels per day over the week to 21.1 million barrels per day.
The Energy Information Administration (EIA) statistics revealed that, in contrast to market forecasts of a 2.2-million-barrel depletion, U.S. oil stockpiles decreased by 2.5 million barrels to 457.1 million barrels in the week ending June 14.
The EIA also reported that gasoline inventories decreased by 2.3 million barrels to 231.2 million barrels, contrary to estimates of a 600,000-barrel rise.
NNPCL and Total Energies sign $550 million gas deal
Meanwhile, the Nigerian National Petroleum Company Limited (60 percent) and TotalEnergies (40 percent), the operators of the Oil Mining Lease 58 onshore license in Nigeria, signed a $550 million Final Investment Decision for the development of the Ubeta gas field.
The OML 58 license is situated in Rivers State, roughly 80 km northwest of Port Harcourt, and includes the two producing fields of the Obagi oil field and the Ibewa gas and condensate field.
The Obite treatment center processes the gas production from OML 58 and supplies it to the Nigeria Liquefied Natural Gas plant as well as the country’s domestic gas market.
The Ubeta field, which was discovered in the eastern Niger Delta in 1964, will produce over 10,000 barrels per day of associated liquids and 350 million standard cubic feet per day of gas, allowing NLNG Limited to secure a steady supply of gas