By Justice Derefaka
Oil prices tumbled on Wednesday, after U.S. crude storage hit another record and coronavirus cases rebounded in countries like Germany and surged in heavily populated areas of the United States.
The United States had its second-largest rise in infections since the pandemic began. Mounting infections there as well as in China, Latin America and India have unnerved investors and pressured oil prices.
“The market is signalling that if it doesn’t get constant reassurance that we are emerging from the breakdown in demand that happened because of the pandemic, then higher oil prices really don’t make sense,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.
A stronger U.S. dollar .DXY, which moves inversely with oil, and a slump in equities .N also weighed on prices.
U.S. crude oil inventories swelled last week by 1.4 million barrels, exceeding expectations for a 299,000-barrel rise, the Energy Information Administration said. EIA/S
That marked the third straight record for crude in U.S. storage.
The International Monetary Fund said the pandemic is causing wider and deeper economic damage than first thought, and it slashed its 2020 global output forecasts further.
India’s oil imports in May hit the lowest since October 2011 as refiners with brimming crude inventories cut purchases.
China, the world’s top crude importer, is also expected to slow imports in the third quarter, after record purchases in recent months.
Preliminary export plans for Nigerian crude oil in August showed a slight fall in volumes for some main grades compared with last month, as the OPEC member sought to comply with a producer pact to cut output.
* Exports for Bonny Light, Bonga, Qua Iboe and Forcados crude are set for 743,000 barrels per day (bpd), down 25,000 bpd from the last month.
* Two of the four cargoes from Bonga were carried over from the previous month due to maintenance on that stream.
* The head of Nigeria’s NNPC said this month the country would need to cut an additional 40,000-45,000 bpd starting in mid-August to compensate for over-producing oil in previous months.
* Traders said Nigeria largely complied with the new OPEC+ agreement for July exports and August volumes would not be sharply reduced.
* As crude and product destocking goes slowly in Europe despite higher car use, differentials for Nigerian light oil remains steady below dated Brent plus $1.
* Angolan prices also remained steady, with traders expecting slow buying from Chinese state and independent refiners to eventually drive them down further.
Prices are as follows:
(1)Dated Brent =$40.455/ bbl (-3.15)
(2)Bonny Light =$40.04/bbl (-2.69)
(3)QuaIboe =$40.09 /bbl (-2.64)
(4)Forcados =$40.34 /bbl (-2.69)
Stay Safe and have a wonderful week
