By Justice Derefaka (Technical Adviser on Gas Business and Policy Implementatio to the Honorable Minister of State for petroleum Resources)
Oil futures slipped 1% with prices on both sides of the Atlantic heading for their biggest weekly drops since June, as lacklustre demand and ample fuel supplies offset support from a weaker dollar.
The volume of crude arriving in China, the world’s largest crude importer, is set to slow in September after rising for five straight months as its refiners gradually digest bloated inventories, according to data on Refinitiv Eikon.
In the United States, refiners awash in diesel inventory are unlikely to boost output soon.
“Soft margins are likely to cap further crude rallies and we anticipate further run cuts this fall to expedite the rebalancing of product stocks,” RBC Capital analyst Mike Tran said in a note.
Production cuts led U.S. gasoline inventories to fall at a “manic” pace in the past two months, even though U.S. mobility indicators suggest that driving patterns have largely plateaued over the past 6-8 weeks, he added.
Middle distillates inventories have soared to 9 years high in Singapore. FGE analysts said rising coronavirus cases worldwide and renewed lockdowns would dash hopes of a drawdown in oil stocks for some time. The pressure remains on refiners to keep operating rates low, FGE said.
China’s state-owned Unipec placed a cargo of Nigerian crude, while two further offers went unmatched.
Unipec sold a 29-30 September cargo of Nigerian Antan to BP at North Sea Dated -0.35 in the afternoon trading window. The firm had initially offered the cargo at Dated +0.20. Unipec also offered a 28-29 October Okwori cargo at Dated +0.35 and a 6-7 October Ghanaian Jubilee cargo at Dated -0.15. Both were reduced by 45¢/bl from earlier in the session. No deals were struck for either.
US imports of Nigerian crude increased for the third consecutive week. Import volumes reached 189,000 b/d in the week ending 28 August, up from 48,000 b/d three weeks prior.
In Nigeria, private-sector conglomerate BUA group has awarded French engineering firm Axens a contract to supply process technologies for its planned 200,000 b/d refinery and petrochemicals facility.
Axens will start basic engineering design studies before the end of this month. BUA Group’s engineering, procurement and construction (EPC) division will then start working on the plant construction, which is slated to be completed by 2024. If the project goes ahead, the multi-billion dollar facility will produce gasoline, diesel and jet fuel meeting Euro-5 specifications for the Nigerian market and the larger west African region.
Nigeria is “no longer in the business of fixing” fuel prices, Timipre Sylva, the minister of state for oil, said on Thursday.
Africa’s largest oil producer had been spending 1 trillion naira ($2.63 billion) a year subsidising petrol prices but the global oil price crash had made removing the subsidies “inevitable”, Sylva told an online briefing.
“It is about the survival of our country, the economic survival,” he said. “There are certain things that the country can ill-afford at this time.”
In March, the government announced a new pricing mechanism that it said would maintain its control, but allow prices to move with the market and eliminate subsidies.
Sylva said prices would now fluctuate freely with international markets, and the ministry would become an “umpire” rather than a price-setter.
“Our duty now is to ensure the public is not cheated,” he said.
Sylva said private importers could now compete with PPMC and sell fuel at other prices. However, if PPMC sets its price below market, state oil company NNPC could in effect remain the primary supplier; price caps had previously made it unprofitable to import fuel, and NNPC had been importing more than 90% of Nigeria’s gasoline.
Sylva added that the government is also launching initiatives to convert cars to run on liquefied natural gas (LNG), liquefied petroleum gas (LPG) and compressed natural gas (CNG) that will give Nigerians alternative fuel choices.
He added that the nation was producing 1.412 million barrels per day (bpd) of crude oil. Its output has been closely watched for compliance with an OPEC-led supply cut agreement.
The Prices are as follows:
(1)Dated Brent =$41.57 /bbl (-1.465)
(2)Bonny Light =$41.735 /bbl (-1.525)
(3)QuaIboe =$41.385 /bbl (-1.525)
(4)Forcados =$41.835 /bbl (-1.525)
Premium unleaded pms= $391 /mt (-6.75)
0.1% Gasoil= $330/mt (-20)
Clean Tanker freight UKC-WAF=
Stay Safe and have a wonderful week.