By Justice Derefaka (Technical Adviser on Gas to the Honorable Minister of State for Petroleum Resources)
Oil prices hovered below five-month highs on Thursday, falling after a session in which bearish sentiment about fuel demand counteracted optimism about Iraq’s supply cuts, pushing the benchmarks in and out of positive territory.
Concerns remain that demand is depressed by the economic slowdown due to the coronavirus pandemic, said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Earlier in the session, planned output cuts from Iraq boosted the contracts.
Iraq said it would make an additional cut in its oil production of about 400,000 barrels per day in August to compensate for its overproduction over the past period under the OPEC supply reduction pact.
“In the medium term the weak demand is likely to weigh more heavily than the positive sentiment (is supportive), which is why we expect prices to correct in the near future,” Commerzbank analyst Eugen Weinberg said.
JPMorgan trimmed its oil demand forecast for the second half of the year by 1.5 million bpd, but raised its average Brent price forecast for the whole year to $42 a barrel from $40.
Saudi Arabia’s state oil giant Aramco cut its September official selling prices (OSPs) for its Arab light crude for deliveries to Asia by 30 cents a barrel from August, and left its prices to the U.S. unchanged from the previous month.
This briefly lent strength to the market, quelling previous fears that the producer would slash prices, spiking another price war, said Bob Yawger, director of Energy Futures at Mizuho in New York.
– A large number of Angolan cargoes changed hands on Thursday after offer levels fell, with trade houses coming in to buy more cargoes for storage as end-user demand, especially Chinese, stagnated.
* Chinese appetite for August and September loading west African crude has been lower on the back of port logjams following a buying spree during peak COVID-19 lockdowns in the western hemisphere. Major floods in China have also dented fuel
* India’s IOC closed a buy tender for cargoes loading Oct. 1-10, awarding it to Chevron and Shell. Chevron was thought to have sold a cargo of Agbami in the tender.
Prices are as follows:
(1)Dated Brent =$45.225 / bbl (-0.695)
(2)Bonny Light =$44.685/bbl (-0.8)
(3)QuaIboe =$44.485 /bbl (-0.8)
(4)Forcados =$44.835 /bbl (-0.8)
Premium unleaded pms= $392.5/mt (-0.75)
0.1% Gasoil= $372.5/mt (-14.25)
Clean Tanker freight UKC-WAF= $17.51/mt (-0.84)
Stay Safe and have a wonderful week.