By Justice Derefaka (Technical Adviser on Gas and Polcy Implementation to the Honorable Minister of State for Petroleum Resources)
Oil settled higher on Monday, supported by data suggesting Chinese factories were returning to pre-pandemic levels, signs of rising energy demand and hopes for an agreement in the United States on more coronavirus-related economic stimulus.
Prices also found support after U.S. President Donald Trump tweeted that top congressional Democrats wanted to meet with him on coronavirus-related economic relief.
The talks between Democrats and the Trump administration broke down last week.
The oil complex is heavily reliant on that aid. There is the need to be able to boost economic activity to spur demand.
On Sunday, Saudi Arabian Aramco Amin Nasser he sees oil demand rebounding in Asia as economies gradually open up.
China’s factory deflation eased in July, driven by a rise in global oil prices and as industrial activity climbed toward pre-pandemic levels.
Iraq said on Friday it would cut its oil output by a further 400,000 barrels per day in August and September to compensate for its overproduction in the past three months.
The move would help it comply with its share of cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+.
This would send out a strong signal to the oil market on various levels. That said, this would also require the international companies operating in Iraq to join in with the cuts.
Interest in Nigerian crude has been stifled in Europe by the abundance of cheap-landing light, sweet crude from the US as well as pressure on refinery margins.
That has left the market facing another overhang for September cargoes.Light crudes are really taking a step down with ample Midland around and length still available on Nigeria’s 1.5 million b/d September program with a week to go until October trading would usually be expected to commence.
Traders said there have not been any spot trades in the Nigerian market for a couple of weeks, and offer levels have been drifting lower. Instead, the crude has been sold into tenders, most recently by Sasol on Aug. 7.
Angola and Nigeria have come under scrutiny, along with Iraq and Kazakhstan, for their excess output.
Nigeria was well above its cap in July, producing 1.56 million b/d, the survey found, though the country and OPEC officials say its offshore Agbami grade should be recategorized as condensate. The country’s quota was 1.412 million b/d.
Platts estimated Agbami production at about 160,000 b/d for July. Stripping that out from Nigeria’s production would propel the country’s quota compliance to 103% from 65%.
Prices are as follows:
(1)Dated Brent =$44.485 / bbl (0.225)
(2)Bonny Light =$44.21/bbl (0.22)
(3)QuaIboe =$44.01 /bbl (0.22)
(4)Forcados =$44.36 /bbl (0.22 )
Premium unleaded pms= $395.75/mt (8)
0.1% Gasoil= $365.75/mt (-0.25)
Clean Tanker freight UKC-WAF= $17.51/mt (0)
Stay Safe and have a wonderful week.