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Oil on track for weekly gain as Iran tensions support



Oil prices rose on Friday and were on track for a weekly increase as geopolitical tensions over Iran remained unresolved, although flagging prospects for global economic growth amid the U.S.-China trade war capped gains.

Brent crude futures LCOc1 were up 23 cents at $63.62 per barrel at 0922 GMT, equivalent to a weekly rise of around 1.8 per cent.

They fell six per cent last week.

U.S. West Texas Intermediate crude CLc1 was 25 cents higher at $56.27 a barrel, a weekly gain of 1.1 per cent.

It fell to 7.5 per cent last week.

Tensions remained high around the Strait of Hormuz, the world’s most important oil passageway, as Iran refused to release a British-flagged tanker it seized last week in the Gulf.

U.S. Secretary of State, Mike Pompeo, said Washington had asked Japan, France, Germany, South Korea, Australia and other nations to join a maritime security initiative in the Middle East so oil and other products can flow through the strait.

However, oil prices’ reaction to the strains in the Gulf has been relatively muted.

“It appears that the majority of market participants do not expect a military conflict that would hamper oil shipments,’’ Commerzbank analyst, Carsten Fritsch, said.

Prices also drew support from a crude inventory draw in the U.S., but gains were limited as the fall appeared to have been largely anticipated.

U.S. production in the Gulf of Mexico was still feeling the effects of Hurricane Barry.

“Several indicators pointing to a slowdown of global oil demand growth appear to have taken over market sentiment,’’ Jefferies analyst, Jason Gammel, said.

Reuters’ polls taken July 1-24 showed the growth outlook for nearly 90 per cent of the more than 45 economies surveyed was downgraded or left unchanged.

That applied not just to this year but also 2020.

“Growing challenges in the macroeconomic environment has kept bullish bets in check as risk appetites remain soft over potential weakness in global fuel demand,’’ said Benjamin Lu, Commodities Analyst at Singapore-based Phillip Futures.

The slowdown in global manufacturing and trade, and the associated hit to oil consumption, largely stems from a U.S.-China trade war that has rumbled on over the last year.

Next week, top U.S. and Chinese negotiators meet for the first time since then.


Edited by Abdulfatah Babatunde


OPEC+ set for talks on extending oil reduction deal on Saturday




Moscow, Jun 5, 2020 The Organisation of the Petroleum Exporting Countries (OPEC

) and allied oil producers are scheduled to conduct negotiations on Saturday, Russia’s Energy Ministry and sources in Vienna said.

The talks among the Vienna-based cartel and the Russia-led group of aligned countries, known as OPEC+, are expected to focus on whether to prolong an oil output reduction deal that was agreed two months ago to raise global oil prices that had plummeted as the coronavirus crisis hit demand.

The talks were to be completed within a single day, with OPEC ministers to begin at 1200 GMT and OPEC+ counterparts to enter the talks, two hours later, Russian state news agency TASS reported on Friday.

“It is going to be a long and difficult night,’’ an undisclosed source, involved in the talks, was quoted as saying.

The talks via video link had initially been scheduled to take place a few days later, on Tuesday and Wednesday.

Ministers of the OPEC+ countries agreed in a videoconference in April to cut output by 9.7 million barrels per day for May and June.

Since then, the benchmark price for European Brent oil has recovered from a level of around $20 per barrel to above $41.

An agreement to prolong the production curb seems likely, Commerzbank analyst, Eugen Weinberg, wrote in Frankfurt.

In addition, countries that had produced more than they should last month apparently agreed to uphold their commitments in the future, he said, pointing to Iraq, Nigeria, Angola and Kazakhstan.


Edited By: Abdulfatah Babatunde (NAN)

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Oil & Gas

OPEC+ cuts responsible for current oil market stability — Barkindo



The Secretary-General of the Organisation of Petroleum Exporting Countries (OPEC), Dr Mohammad Barkindo has attributed the stability in the global crude oil market and the recent rebound in the price of crude oil to the OPEC+led response to the volatility  in the market.

Barkindo disclosed in his presentation, via videoconferencing, to the 133rd Meeting of the Economic Commission Board.

He said that the industry was not out of the woods yet, stating that the pace of the global economic rebound – particularly given the very uncertain economic paths of the world’s two largest economies, the US and China .

According to him, the recovery in global trade, will be central to the revival of the oil market.

“I am confident that this Organisation will emerge from the current challenging and unprecedented times more united, stronger and more forward-looking. We are not out of the woods yet.

But the historic OPEC+-led response to the current crisis is already helping to reduce volatility, stabilize the oil market, and to provide a platform for recovery and growth in the coming months and years,” he said

Barkindo emphasised the need for timely and accurate data to help its various committees.

He stated that strategic decisions to further stabilise the crude oil market could only be reached when underpinned by up-to-date and in-depth analysis.

“It is clear that the postpandemic world will be much different and require thorough and forward-looking reflections.

” It will take time for a new equilibrium to emerge, not only in terms of a balanced market, but among producing countries as well.

“No individual stakeholder can have all the answers. It is only by reaching out and deepening the dialogue between reputable institutions that we can provide a better and broader sense of the rapidly evolving energy landscape.

“We continue to work closely with the International Energy Agency – including regular consultations – and International Energy Forum to ensure open lines of communication between producers and consumers.

” Together, we collaborate to ensure access to accurate, timely and transparent data about the markets, ” he said.

He noted that the challenges created by the COVID-19 tragedy wwould require special attention to ensure that the OPEC Conference had access to quality and timely data, market information, and fact-based assessments on current and projected conditions.

He further said that it was essential that the Joint Ministerial Monitoring Committee of the Declaration of Cooperation (DoC) was equipped with the latest and best information so it can make apt and timely recommendations under rapidly changing circumstances.

“Indeed, the link between transparent data and better predictability, and a secure and sustainable energy supply, will grow in importance in the months and years to come,” he said

Barkindo also stated that OPEC was constantly working hard to improve its research and deepen its analysis to provide the best possible input to its various boards which are major sources of key decisions reached by its ministerial conference.

He, however, noted that the rebalancing process may be longer than anticipated under the prevailing uncertainties and downside risks, especially given that global inventories appear to be continuing to build, albeit at a much lower rate than the record pace of late March and April.

edited by Sadiya Hamza

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Oil & Gas

Major oil marketers lost N10bn to fuel price reduction, says Chairman



The Major Oil Marketers Association of Nigeria (MOMAN), on Thursday said marketers lost over N10 billion due to reduction of petrol pump price from N145 per litre to N121 by government.

The Chairman of MOMAN, Mr Adetunji Oyebanji, made the disclosure during a webinar on “Downstream Petroleum Market Deregulation: Prospective Impact on Nigeria Economy Post COVID-19.”

The News Agency of Nigeria reports that the webinar was organised by Financial Energy Review in collaboration with Leadgrid Series.

Oyebanji, who is also the Managing Director of 11Plc, said the petroleum downstream sector was hard hit by the twin challenges of COVID-19 and crash in global crude oil prices.

He said the sector thrived on movement of persons and goods which were severely curtailed due to the lockdown measures put in place by the Federal and State Governments to contain the spread of coronavirus.

The chairman called for the full deregulation of the petroleum downstream sector,  adding that what government recently did was only to remove subsidy on Premium Motoring Spirit (PMS) also called petrol.

Oyebanji said: “Why we talk about complete deregulation being a better option is because we need investments in our pipelines distribution network which are very old.

“We need our refineries to be put in place and Dangote Refinery is coming up but we need more refineries so that we can reduce the pressure on our foreign exchange reserve.

“Players in the market need to know when to stock and when not to stock products because we may have lost up to N10 billion when those prices were reduced recently.

That doesn’t encourage investors,” the MOMAN chairman said.

He noted that the billions of naira being spent on fuel subsidy by government could be deployed to other critical areas which would help transform Nigeria’s economy.

He named the critical areas to include health care, education and infrastructure development.

The MOMAN chairman said: “While we welcome the removal of subsidy on fuel, we need clarity on government’s claim that the market has been deregulated.

“Many of the institutions supporting the former regime such as the Petroleum Equalisation Fund, Petroleum Subsidy Fund and the Petroleum Products Pricing Regulatory Agency are still operational.

“So there is a bit of confusion whether we have fully deregulated the sector or whether government just decided that they won’t pay subsidy anymore,” he said.

Oyebanji said there should be proper legislative framework to guide the deregulation of the downstream sector and protect the interest of the country and private investors.

He added that for the sector to achieve its potentials, government must switch to a monitoring role instead of being a key player and regulator at the same time.

Edited By: Chioma Ugboma/Ejike Obeta (NAN)

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Oil prices fall on doubts over output cuts, surging United States diesel inventories



Oil prices dropped on Thursday, reversing gains in the previous session, on concern over whether major crude producers will be able to agree to extend record output cuts, heightened by worries over a huge build in United States distillate inventories.

Brent crude LCOc1 futures fell 1.46 per cent, or 58 cents, to $39.21 a barrel as of 0459 GMT, while the United States West Texas Intermediate (WTI) crude CLc1 futures slid 1.98 per cent, or 74 cents, to $36.55 a barrel.

Saudi Arabia and Russia, two of the world’s biggest oil producers, have agreed to support extending into July the 9.7 million barrels per day (bpd) in supply cuts backed in April by the OPEC+ group, comprised of the Organisation of the Petroleum Exporting Countries and other major producers.

But they failed to agree on holding an OPEC+ meeting on Thursday to discuss the cuts, with OPEC sources saying it would be conditional on countries that have not complied with their targets so far deepening their cuts.

“The market has taken a look at that and said it’s getting more complicated to get that deal over the line,’’ said Lachlan Shaw, head of commodity research at National Australia Bank.

“That would imply OPEC+ would go back to what they agreed in April, which was to ease their supply cuts to 7.7 million bpd from July,’’ he said.

Further, Saudi Arabia and other Gulf producers, Kuwait and the United Arab Emirates are not planning to extend voluntary additional output cuts of 1.18 million bpd after June, indicating crude supply could rise next month no matter what OPEC+ decides.

The huge build in distillate inventory in the United States, the world’s biggest oil user, also weighed on prices, said CMC Markets’ chief market strategist, Michael McCarthy.

The United States Energy Information Administration data, on Wednesday, showed gasoline stocks rose by 2.8 million barrels, nearly triple what analysts had expected, while distillate stocks rose by 9.9 million barrels or nearly four times more than expected.

Overall demand for diesel and similar fuels is down by 13 per cent from the year-ago period over the last four weeks.

Gasoline product supplied, a proxy for demand, picked up last week, but the four-week average still shows a 23 per cent drop from the year-ago period.

“It shows the recovery in gasoline and distillate demand is not V-shaped.

It just reinforces that we’ve had this initial (price) recovery driven by supply-side discipline,’’ Shaw said.


Edited By: Abdulfatah Babatunde (NAN)

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United States crude oil inventories decrease last week: EIA




U.S. crude oil inventories decreased during the week ending May 29, the United States Energy Information Administration (EIA) said in a report on Wednesday.

According to the Weekly Petroleum Status Report, U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, decreased by 2.1 million barrels from the previous week.

At 532.3 million barrels, U.S. crude oil inventories were about 12 percent above the five-year average for this time of year.

According to the EIA, total motor gasoline inventories increased by 2.8 million barrels last week and were about 10 percent above the five-year average for this time of year. Finished gasoline and blending components inventories both increased last week.

Distillate fuel inventories increased by 9.9 million barrels last week and were about 28 percent above the five-year average for this time of year.

Propane/propylene inventories increased by 3.1 million barrels last week and were about 12 percent above the five-year average for this time of year. Total commercial petroleum inventories increased last week by 15.1 million barrels last week.


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United States crude oil refinery inputs increase last week: EIA




U.S. crude oil refinery inputs increased during the week ending May 29, the United States Energy Information Administration (EIA) said Wednesday.

U.S. crude oil refinery inputs averaged 13.3 million barrels per day (b/d) last week, 316,000 b/d more than the previous week’s average. Refineries operated at 71.8 percent of their operable capacity last week.

Gasoline production increased last week, averaging 7.8 million b/d. Distillate fuel production decreased last week, averaging 4.7 million b/d.

Total products supplied over the last four-week period averaged 16.1 million b/d, down by 19.4 percent from the same period last year.

Over the past four weeks, motor gasoline product supplied averaged 7.2 million b/d, down by 22.5 percent from the same period last year.

Distillate fuel product supplied averaged 3.4 million b/d over the past four weeks, down by 13.4 percent from the same period last year. Jet fuel product supplied was down 68.7 percent compared with the same four-week period last year.


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Egypt announces new oil discovery in Western Desert




A new oil discovery was made in Egypt after drilling a well in the Western Desert that would produce massive amounts of crude oil and natural gas, an Egyptian petroleum company said in a statement on Wednesday.

The discovery was achieved by Borg Al Arab Petroleum Company at Abu Sennan concession after drilling Al Salemia Well-5 in the Western Dessert, according to the statement.

“The new discovery has been put on the production plan at a rate of 4,100 barrels of crude oil per day and 18 million cubic feet of natural gas per day,” said the company.

Borg Al Arab Petroleum Company is a joint venture between the Egyptian General Petroleum Corporation and Kuwait Energy Egypt, and it is responsible for operations at Abu Sennan concession in the Western Desert.

The company said that its chief reported the new discovery to the Egyptian Petroleum Minister Tarek al-Molla.

In late 2019, the company announced a petroleum discovery in ASH-2 area of oil rich Abu Sennan, with an average production rate of 7,000 barrels of crude oil and 10 million cubic feet of natural gas per day.

Egypt saw a 7-percent surge of oil and gas production in 2019 by producing some 650,000 barrels of crude oil and 7.2 billion cubic feet of natural gas per day, according to a former statement by the Egyptian oil minister.

Egypt’s largest Zohr offshore gas field in the Mediterranean Sea, which was discovered by Italy’s giant Eni in 2015, greatly contributes to the country’s natural gas production as it produces alone about 2.7 billion cubic feet on a daily basis.


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Oil & Gas

Alleged oil theft : DPR hands over 9 vessels to Navy, EFCC



The Department of Petroleum Resources (DPR) said nine vessels allegedly involved in oil theft had been handed over to the Nigerian Navy and the Economic and Financial Crimes Commission (EFCC).

The News Agency of Nigeria reports that Mr Sarki Auwalu, Director, DPR,  made the disclosure on Wednesday during an online interactive session with the media on topical issues in the oil and gas industry.

Auwalu said the DPR had initiated Crude Oil and Liquefied Natural Gas (LNG) Tracking (COLT) to track vessels coming in or going out of the country in order to curb oil theft.

“We have had a remarkable result with COLT. As I am speaking to you today, we have handed nine vessels to the Nigerian Navy and the EFCC.

“They are under the Western Naval Command. We have arrested several vessels and some of the vessels are for oil thieves.

“We are working with the Nigerian Navy and we quickly alert the Navy whenever we see any suspicious vessel during surveillance,” he said.

Auwalu said that other measures were being implemented by the regulatory agency to improve accountability in the oil and gas sector, which  include the National Production Monitoring System (NPMS) that focuses on data gathering.

“We have been able to track online/real time data of what our productions are and so we are now in the position to say what is the production done by this country.

“All our fields are largely tracked online now. So, it is not true that Nigeria cannot account for what it is producing, be it crude oil or gas, ” he said.

Edited By: Debo Oshundun/Oluwole Sogunle (NAN)

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Oil barrel prices unlikely to return to $60 until 2022 – Equatorial Guinea’s minister



Oil prices are unlikely to return to the pre-crisis level of $60 per barrel until 2022, yet the market has adjusted to the oil price of $30 per barrel, Equatorial Guinea’s minister of mines and hydrocarbons, Gabriel M. Obiang, has said.

Obiang made this known in an interview with Sputnik on Wednesday.


don’t see oil going back to the pre-pandemic prices and $60 until 2022.

“There is a lot of cheap oil in the world. It’s going take time for the inventory to go down.

“People expecting oil to go to the $40 and $50, they are being very optimistic.

“I think that it’s more logical to be conservative and comfortable around $30 area, $30 to $39, $40,” Obiang said.

Although the price of $30

per barrel is not very comfortable and the producers would prefer a higher figure, it at least brings some stability and allows the budget to be managed, the minister noted.

The oil prices plummeted earlier this year against the background of the COVID-19 pandemic, the lockdown measures,and the economic slowdown.

In April, the prices of the West Texas Intermediate even went negative.

However, the energy market is starting to show the signs of recovery after the OPEC+ group and some G20 nations decided to slash their oil output in an effort to stabilise the prices.

Edited By: Emmanuel Yashim (NAN)

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