By Justice Derefaka (Technical Adviser on Gas to the Honorable Minister of State for petroleum Resources)
Brent posted a fourth month of gains in July and U.S. crude posted a third as both rose from depths hit in April, when much of the world was in lockdown due to the coronavirus pandemic.
“Investors are worried about supply gluts as the OPEC+ is due to start reducing production cuts this month and a recovery in oil prices from record lows is expected to encourage U.S. shale producers to ramp up output,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
“Also, fears over a resurgence in the coronavirus cases are weighing on oil markets,” he said, predicting that the prices will stay in low $40s this week.
Oil output by the Organization of the Petroleum Exporting Countries rose by over 1 million barrels per day in July as Saudi Arabia and other Gulf members ended their voluntary extra supply curbs on top of an OPEC-led deal, and other members made limited progress on compliance.
A Reuters poll showed on Friday that oil prices are set for a slow crawl upwards this year as the gradual easing of coronavirus-led restrictions buoys demand, although a second COVID-19 wave could slow the pace of recovery.
The Australian state of Victoria declared a state of disaster and authorities in the Philippines said they would impose fresh restrictions in Manila this week, reflecting worries around the world about getting the pandemic under control.
Nigerian oil continued to face an uphill battle into European markets as new Chinese export quotas raised hopes for sellers of Angolan crude.
* Poor refining margins and discounted barrels from competing regions like the North Sea and the United States are extending Nigerian oil’s poor selling streak in Europe.
* The trend is not as severe as earlier in the pandemic, traders said, but only a small handful of cargoes have sold in the recent week to Mediterranean refiners.
* Traders awaited the result of a tender for sweet crude by Indonesia’s Pertamina valid until early next week, but the company’s demand is likely well covered by oil in floating storage arranged months ago.
* Indian state oil companies are set to provide the only consistent market for Nigerian crude, though possible run-cuts could curtail future buying.
Prices are as follows:
(1)Dated Brent =$42.885 / bbl (0.43)
(2)Bonny Light =$42.635/bbl (0.355)
(3)QuaIboe =$42.485 /bbl (0.355)
(4)Forcados =$42.785 /bbl (0.355)
Premium unleaded pms= $362/mt (6)
0.1% Gasoil= $362.75/mt (5.25)
Clean Tanker freight UKC-WAF= 20.20/mt (0.65)
Stay Safe and have a wonderful week.