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Tag: oil prices

  • Oil rises to $65 amid supply disruptions

    Oil rises to $65 amid supply disruptions

    Oil prices rose yesterday following the temporary suspension of output at Kazakhstan’s oil fields and expectations of firmer global economic growth that could drive fuel demand, even as investors continued to monitor U.S. President Donald Trump’s tariff threats against European states that oppose his push to acquire Greenland.

    Brent crude gained 98 cents, or 1.53 per cent, to $64.92 a barrel while U.S. West Texas Intermediate (WTI) crude was up $1.11, or 1.87 per cent, at $60.55.

    Kazakh oil producer Tengizchevroil, led by Chevron (CVX.N), had on Monday announced a temporary halt to production at the Tengiz and Korolev oilfields after an issue affected power distribution systems. The field could be halted for another seven to 10 days, cutting crude exports via the Caspian Pipeline Consortium.

    “Tengiz is amongst the largest fields in the world and so the outage is certainly disruptive for crude flows. But this disruption does look to be temporary and so if the tariffs rhetoric continues, we expect prices to fall back,” the Director of Energy and Refining at ICIS, Ajay Parmar, said.

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    The oil market also drew support from better-than-expected fourth-quarter Chinese gross ⁠domestic product data released on Monday, said IG market analyst, Tony Sycamore.

    “This resilience in the world’s top oil importer provided a lift to demand sentiment,” he said.

    China’s economy grew by five per cent last year and the country’s refinery throughput in 2025 climbed 4.1 per cent on a year-over-year basis, data showed on Monday. China’s crude oil output also grew 1.5 per cent.

    Prices also gained on an upward revision of this year’s global economic growth estimate by the International Monetary Fund (IMF) as well as stronger diesel prices, said PVM analyst Tamas Varga.

    A sliding dollar has also supported prices, as a weaker U.S. currency could boost oil demand by ⁠making dollar-denominated purchases cheaper.

    Fears of a renewed trade war escalated over the weekend after Trump said he would impose additional 10 per cent levies from February 1 on goods imported from EU members Denmark, Finland, France, Germany, Sweden and the Netherlands, as well as Britain and Norway, rising to 25 per cent on June 1 if no deal on Greenland was reached.

    Trump’s tariff threats have a negative bearing on crude prices as the tariffs could lead to lower global economic growth and therefore lower oil demand growth, said Parmar of ICIS.

    European Commission President Ursula von der Leyen said yesterday that the bloc’s executive arm is working on a package to support Arctic security and that the tariffs are a mistake.

  • Oil prices rally boosts push for higher reserves, stable naira

    Oil prices rally boosts push for higher reserves, stable naira

    The Central Bank of Nigeria (CBN) has sustained strategic interventions aimed at bolstering foreign reserves, stabilising the naira, and maintaining robust dollar liquidity in the market. As global oil prices surge—fuelled in part by heightened tensions between Israel and Iran—Nigeria finds itself navigating a mix of economic risks and potential windfalls. Brent crude futures for July delivery have spiked by over nine per cent, reaching $75.15 per barrel—the highest level since early February. Analysts note that the apex bank is already capitalising on the oil price rally to deepen recent gains in foreign reserves and strengthen the naira’s stability, writes Assistant Editor COLLINS NWEZE.

    Oil prices spiked over the weekend following a major pre-emptive strike by Israel on Iran, raising fears of a broader conflict in the Middle East and potential disruptions to key oil supply routes. Brent crude futures for July delivery jumped more than nine per cent, hitting $75.15 per barrel—the highest since early February. West Texas Intermediate (WTI) crude also surged, climbing to $74 per barrel at its peak, reflecting a 10 per cent gain.

    While markets are closely watching the fallout on Iranian oil production, analysts warn that escalating tensions around the Strait of Hormuz—the world’s most critical oil chokepoint—could spark a sharp and sustained rally in global oil prices. The development carries significant implications for Nigeria, which relies heavily on oil exports for revenue. A sustained rise in crude prices could boost the country’s dollar earnings, improve its foreign exchange reserves, and support greater exchange rate stability.

    Already, the outlook for the naira has improved, with oil prices crossing the Federal Government’s 2024 budget benchmark of $75 per barrel for the first time this year. In addition to favourable oil prices, recent structural reforms by the Central Bank of Nigeria (CBN) have helped correct long-standing imbalances in the economy. Nigeria’s Gross Domestic Product (GDP) grew by 3.4 per cent in 2024, with Q4 performance reaching 4.6 per cent—the strongest quarterly growth recorded in more than a decade.

    Nigeria’s economy is showing signs of steady recovery, with inflation gradually easing and the prices of essential food items like rice and beans beginning to stabilize. Alongside this welcome development, the Central Bank of Nigeria (CBN) has recorded a fivefold increase in net foreign reserves, while the Naira exchange rate continues to gain ground after months of volatility. These macroeconomic improvements are the result of deliberate policy actions taken by the apex bank under the leadership of Governor Olayemi Cardoso. Beyond the anticipated boost in oil revenue—especially amid global tensions threatening oil supply—Cardoso is driving a broader strategy aimed at diversifying dollar inflows into the economy.

    Informed by China’s export-led growth model, the CBN has advocated for a competitive exchange rate policy that encourages export-driven development. Cardoso has urged Nigerian businesses to adopt export-oriented strategies by tapping into high-potential sectors such as agriculture, manufacturing and the creative industries. The emphasis is on adding value—moving from raw material exports to finished goods—thereby boosting foreign exchange earnings and industrial capacity.

    To reduce dependence on imports and build local capacity, the CBN is also pushing backward integration across key sectors. Cardoso recently advised telecom companies to begin producing vital components like SIM cards, cables and towers locally. During a meeting in Abuja with Airtel Africa’s Group CEO Sunil Taldar, he explained that such efforts would reduce pressure on foreign exchange, create jobs, and stimulate the real sector. Taldar, in turn, lauded the CBN’s ongoing reforms and reaffirmed Airtel’s commitment to local production and expanding financial inclusion through digital technology. The telecom sector, long reliant on imported equipment, is now seen as ripe for transformation through domestic innovation and manufacturing.

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    The creative economy is also under the spotlight. Cardoso highlighted its capacity to attract up to $25 billion annually through exports of music, film, crafts, and digital content. He encouraged creatives to leverage digital platforms, global tours, and international collaborations to deepen Nigeria’s export footprint. Market confidence is also rebounding, as foreign portfolio investors (FPIs) return to Nigeria’s FX market, buoyed by improved transparency, stronger fundamentals, and effective CBN interventions. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), noted that despite global uncertainties, Nigeria is beginning to look like a more attractive destination for capital flight from riskier markets.

    However, in Nigeria, there is historically a positive correlation between crude oil prices, GDP growth and stock market performance. “The outlook for the Nigerian stock market is therefore likely to be positive in the current context,” Yusuf said.

    He said the surge in crude oil price would impact on Nigeria’s forex earnings, oil being the biggest forex earner for the country. “This development would also positively impact the country’s foreign reserves, ensure better forex liquidity and ultimately the stability of the naira exchange rate.

    “The oil sector currently accounts for significant amount of government revenue. An improvement in crude oil price would therefore have a significant impact on government revenue. An improvement in revenue would positively impact fiscal consolidation and hopefully moderate the growth of the fiscal deficit.

    “Investments in the oil and gas sector would post better returns if the conflict persists.  High oil price is good news for upstream oil and gas investors,” Yusuf said.

    Oil revenue target

    Also, the possibility of Federal Government achieving N19.5 trillion oil revenue target for the year rose with the soaring prices of crude oil over Middle East crisis. Analysts at Afrinvest West Africa, said that Federal Government’s projected oil revenue of N19.5 trillion will be on track. They highlighted that, based on previous macro commentary, the Federal Government needs to deploy a more prudent framework that prioritises sustainable budget growth.

    There is also a high possibility that budget deficits for the year could reduce below N17 trillion, reducing total debt stock. To turn sustain revenue surge, the analysts recommended some measures the FG can take to sustain the improved macroeconomic environment. Firstly, with the increase in revenues and substantial reduction in PMS, Electricity and FX subsidies the FG should be deploying more resources towards critical infrastructure development while also tackling insecurity headlong to support improved productivity in the agrarian communities.

    Secondly, the FG needs to prioritise optimising revenue potentials by strategically using the instrumentality of the state to end crude oil theft and boost aggregate output to the target 2.06mbpd level. Also, as recommended by the World Bank reducing the cost A of governance would be pivotal to Nigeria’s revitalisation drives, given the current disturbing level of debt profile.

    Understanding telecoms Sector

    According to the Nigerian Communications Commission (NCC), the total active telephony subscribers increased by 3.2 per cent month/month to 164.93 million in December 2024. The increase reflects the gradual recovery in the subscriber base following the conclusion of the NIN-SIM linkage program by mobile service providers in September. Analysing the market share by operators, MTN Nigeria led by 51.4 per cent with 84.61 million subscribers, Airtel Nigeria followed with 34.4 per cent (56.62 million subscribers), Globacom with 12.2 per cent (20.14 million subscribers) and 9mobile with 2.0 per cent (3.28 million subscribers). At the same time, the total number of internet subscribers rose by two per cent month/month to 139.28 million in December.

    Looking ahead, analysts at Cordros Securities said they expect subscriber base recovery through SIM reactivation initiatives, especially from market leaders – MTN Nigeria and Airtel Nigeria. According to the National Bureau of Statistics (NBS) third quarter 2024 Gross Domestic Product (GDP) report, the information and communication sector, is made up of telecommunications and information services; publishing; motion picture, sound recording and music production; and broadcasting.

    Views from stakeholders

    The Executive Secretary of the Association of Licensed Telecommunication Operators of Nigeria (ALTON), Gbolahan Awonuga, said that aside telecom operators, other key business owners and entrepreneurs can also invest in the local manufacturing of key components in telecoms operations. He said: “We have to look inwards and get Nigerian companies to produce these key components in telecom operations locally. Government also has a role to play, by ensuring that key infrastructure especially power is available. We do not want a situation where locally produced inputs, will become more expensive than imported versions.”

    Awonuga said that telecom sector plays key roles in banking services, including enabling digital payments and ensuring security of transactions. He said banking and telecom sectors have more to gain if backward integration thrives in the country adding that government has significant role to play to make the move a success. 

    Research Head, Cowry Asset Management Limited, Charles Abuede, said the CBN governor’s call was to discourage the importation of foreign services into Nigeria, especially when efforts can be made to develop such services locally. “The high demand for foreign exchange by telecom operators has further pressured the naira due to increased demand for the dollar. However, with adequate infrastructure development and a conducive operating environment facilitated by regulators, these challenges can be mitigated,” he said. 

    According to Abuede, “given Nigeria’s FX policies, illiquidity in the foreign exchange market, and infrastructure deficits, I think increased investment in the telecom sector would enable operators to embrace backward integration. This would allow them to manufacture key components, such as SIM cards, locally. As a result, production costs could decline—provided the operating environment remains stable. This will improve profit margins and enhance both top-line and bottom-line growth in the long run”.

    The CBN under Cardoso has carried out several efforts to improve the functioning of the FX market. This has led to good results with average daily turnover in the Nigerian Autonomous Foreign Exchange Market increased by 226 per cent in the first half of last year when compared to the same period in 2023. Foreign portfolio inflows have increased by over 72% during this period, while foreign exchange reserves have risen from $32bn in May 2023 to over $40bn.

    This represents the equivalent of eight months’ import cover and marks the highest reserve level in nearly three years. The market has also supported over $9bn in capital outflows over the past year as investors were able to freely repatriate capital and dividends without the need to wait for several months as experienced in the past. These results, Cardoso said, reflect improved confidence in the reforms he embarked on.

    “In addition, we witnessed a $6 billion current account surplus in the first half of 2024 as a result of the impact of these reforms. Reduction in petroleum product imports supported by improved domestic refining capacity, a growing focus on non-oil exports and higher remittance inflows helped to support the positive current account balance,” he said.

  • Oil prices dip as OPEC+ cuts production for third time

    Oil prices dip as OPEC+ cuts production for third time

    Crude oil prices are set for another weekly decline following the decision by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) to boost production by another 411,000 barrels daily in July- making it the third time in a row. This decision, taken at its virtual monthly meeting at the weekend, doubles down on a historic policy shift that has sent crude prices sinking. The hike follows equally sized increases scheduled for May and June, marking a clear break with years of efforts by the group to support global oil prices. As at close of business at the weekend, Brent crude was trading at $62.78 per barrel, with West Texas Intermediate at $60.79 per barrel.

    While there was a consensus for the July increase, supported largely by key nations led by Saudi Arabia, yet, some member states like Russia, expressed reservations, recommending a pause in the supply increases.

    “OPEC+ isn’t whispering anymore,” said Jorge Leon, an analyst at Rystad Energy A/S, who previously worked at the OPEC secretariat. “May hinted, June spoke clearly, and July came with a megaphone.”

    Oil briefly crashed to a four-year low under $60 a barrel in April after the OPEC+ first announced that they would bolster output by triple the scheduled amount, even as faltering demand and President Donald Trump’s trade war were already crushing the market.

    Delegates have offered a range of explanations for the pivot by Riyadh, which had spent years defending high oil prices by restraining supplies.

    According to reports by Bloomberg, some officials suggested the kingdom is trying to appease President Donald Trump, or to reclaim the market share relinquished to US shale drillers and other rivals.

    Still, the medium report indicated that some delegates assert that OPEC+ is simply satisfying robust demand, while others say Saudi Arabia seeks to punish members like Kazakhstan and Iraq for cheating on their output quotas.

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    The strategy transition hasn’t been without a cost. While crude’s pullback offers relief for consumers and central banks grappling with inflation, it poses financial peril for oil producers in OPEC+ and around the world.

    The downturn is also taking a toll in America’s shale oil heartlands, where companies like Diamondback Energy Inc. say production has peaked, despite Trump’s promise the country would “drill, baby, drill” in a new energy boom.

    “We expect similar increases through until the end of the third quarter, as the group increases its focus on defending market share,” ING commodity analysts wrote in a note, suggesting the cartel’s policy will continue weighing on prices in the coming months as well.

    Analysts at Libertex, an online outfit, contend that despite a deterioration in geopolitical stability across the key producing region of the Middle East, oil prices have managed to remain within a relatively narrow band over the past two months. For instance, they maintained that Brent crude oil’s recent price of $63.90 is still more than 15 per cent down from 1 April and close to the local low of $60.23 not previously seen since the height of the pandemic lockdowns in 2021. It’s been a similar story for WTI and Light Sweet, which were at $62.97 per barrel on Friday but which has since dropped to $60.97 per barrel as at close of business yesterday.

    The situation, according to Libertex analysts, stems from the beginning of President Donald Trump’s tariffs, recession fears, and sticky inflation-factors which combine to make it challenging for oil to gain a foothold despite the geopolitical factors that would ordinarily lift the resource. Add to that OPEC+’s recent price control moves, leading to situations whereby supply and demand forces have been cancelling one another out over recent weeks.

    But what additional factors are driving the oil market right now, and where is it likely headed over the summer and beyond?

    Libertex explained that the geopolitical situation and domestic economic politics are both incredibly important, and the combination of ongoing and growing uncertainty in both the Middle East and Eastern Europe has implications for both the supply and demand side.

    Data from the American Petroleum Institute released last week showed that US oil inventories shrank by 4.24 million barrels (mb) over the past week amid expectations of an added one million barrel. This has given cause for optimism as it suggests demand is strong and outstripping supply, which, combined with the other factors above, could lead to higher prices in the short term. However, preliminary economic data show that the US economy shrank by 0.3 per cent in Q1 2025. As such, fears of a recession could keep the oil bulls in check.

    According to refiners, Saudi Arabia is tipped to lower its official oil prices for July to their lowest levels since January in response to the increased output, which would provide a solid stream of cheap and easily accessible oil to the huge Asian market. It certainly seems as if the EU and UK are anticipating significant price drops in the near term, with the two economic powerhouses pushing the US to lower the price cap on Russian oil from $60 to $50 a barrel.

  • Oil rises on improving market sentiment

    Oil rises on improving market sentiment

    Oil prices are looking to finish the week in the green, with the pessimism that dominated the markets in the early part of the year beginning to dissipate.

    Brent crude for May delivery was trading at $73.67 per barrel at yesterday’s session, flat on the day but nearly $2 higher from a week ago while the corresponding WTI contract was unchanged on the day but similarly gained $2 from a week ago to trade at $69.67 per barrel. Oil prices have now climbed about $5 per barrel from their early-month lows.

    A recent Dallas Fed Energy Survey revealed that activity in the oil and gas sector increased slightly in the first quarter of 2025 while the company outlook index decreased 12 points to -4.9, suggesting slight pessimism among energy companies.

    According to the latest Baker Hughes data, U.S. rig counts have continued their sideways move, falling by one w/w to 486. Rig count has remained in the 472-488 range for 41 consecutive weeks. The Permian Basin rig count fell by one w/w to 300, having previously been below 300 for just one week in the past three years. The main change was in the Texas portion of the Delaware Basin where drilling fell by three w/w to a three-year low of 62 rigs. In contrast, the U.S. gas rig count rose by two w/w to 102, with the Haynesville and Marcellus rig count unchanged at 30 and 26, respectively.

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    Likewise, positioning across the energy complex remains mainly negative, with traders concerned about Trump’s tariffs as well as a potential return of Russian oil flows.

    And now commodity analysts at Standard Chartered have buttressed the growing bullish thesis, saying oil market sentiment continues to improve after the lows hit during London’s IE Week in February. StanCharts points to several catalysts driving the improving mood. First off, the supply surpluses the market feared have yet to materialize, with the outlook for Q2 and Q3 suggesting that no surplus is imminent. In contrast, oil markets could soon be facing a deficit, with StanChart predicting that global demand will exceed supply by 0.9 mb/d in Q2 and by 0.5 mb/d in Q3. The U.S. Energy Information Administration (EIA) is, however, more cautious, and sees demand outstripping supply by 0.1 mb/d in Q2 and a balanced market in Q3. Both the EIA and StanChart have forecast a slight inventory draw across 2024 and 2025 combined.

    Last week, StanChart revealed that global oil demand remains robust, with demand in January averaging 102.77 million barrels per day (mb/d), good for a  2.19 mb/d Y/Y increase. StanChart’s figure is based on a variety of national sources and the 19 March Joint Organisations Data Initiative (JODI) release. Notably, the estimates from Standard Chartered align closely with those from the U.S. Energy Information Administration (EIA), which has estimated January oil demand at 102.74 million barrels per day (mb/d), with a growth rate of 1.85 mb/d. Typically, January marks the seasonal dip in global oil demand. However, Standard Chartered forecasts that demand will surpass 105.0 mb/d for the first time in June, peaking at a high of 105.6 mb/d in August 2025.

    Further, StanChart has predicted that the dramatic slowdown in U.S. oil production growth witnessed in 2024 will continue in 2025 and 2026.

    According to the analysts, last year witnessed a sharp slowdown in non-OPEC+ supply growth from 2.46 mb/d in 2023 to 0.79 mb/d in 2024, primarily caused by a reduction in U.S. total liquids growth from 1.605 mb/d in 2023 to 734 kb/d in 2024. StanChart expects this trend to continue, with U.S. liquids growth expected to clock in at just 367 kb/d in 2025 before slowing down further to 151 kb/d in 2026.

  • Oil prices rise on Middle East conflict, set for monthly loss

    Oil prices rise on Middle East conflict, set for monthly loss

    Oil prices rose yesterday on fears of a widening conflict in the Middle East curtailing Iranian crude supply, but prices were headed for a third straight monthly loss because of concerns about waning global demand.

    Brent crude futures for November delivery, expiring yesterday, gained 1 cent to $71.00 a barrel. The more actively traded Brent contract for December delivery was up 69 cents to $72.23. West Texas Intermediate (WTI) futures rose 63 cents, to $68.81.

    Brent was headed for a about a nine per cent month-on-month loss, which would be its biggest decline since November 2022. WTI was set to decline more than six per cent since the end of August.

    On Monday, prices had been supported by the possibility that Iran, a key producer and member of the Organization of the Petroleum Exporting Countries (OPEC), may be directly drawn into a widening Middle East conflict.

    Since last week, Israel has escalated attacks, conducting strikes which have killed Hezbollah and Hamas leaders in Lebanon and hit Houthi targets in Yemen. The three groups are backed by Iran.

    “We suspect that some oil market participants will look past this escalation given that there still has not been a major physical supply disruption and Iran has not demonstrated any appetite to enter this nearly year-long conflict,” said Helima Croft of RBC Capital Markets.

    Oil prices also had a muted response to Beijing’s announcement last week of fiscal stimulus measures in the world’s second-biggest economy and top oil importer.

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    Traders question whether the measures would be enough to boost China’s weaker-than-expected demand so far this year.

    Concerns about rising global crude supplies are also weighing on prices for the month.

    Oil prices slid last week on a report that Saudi Arabia, which is the de facto leader of OPEC, was preparing to abandon its unofficial price target of $100 a barrel for crude as it prepares to increase output.

    “We are proceeding on the premise that last week’s Saudi decision to ramp up production in December will be an overriding bearish consideration to this market for weeks to come,” said Jim Ritterbusch of energy consultancy Ritterbusch and Associates.

    Yesterday’s data was not encouraging for demand, showing China’s manufacturing activity shrank for a fifth straight month and the services sector slowed sharply in September.

    The prospect of Libyan oil output recovering was also weighing on the market. Libya’s eastern-based parliament agreed on Monday to approve the nomination of a new central bank governor, a move that could help end the crisis that slashed the country’s oil output.

  • Oil prices slide on weak demand

    Oil prices slide on weak demand

    In the global commodity market, crude oil prices trended on bearish note amidst uncertainties over demand outlook. The market prices of crude oil pullback despite recent sanctions slammed on Venezuela by the United States (U.S).

     International benchmark Brent crude traded at $85.85 per barrel, down by 1.65per cent decline from the closing price of $87.29 per barrel in the previous trading session.

    The American benchmark West Texas Intermediate (WTI) traded at $80.75 per barrel at the same time, a 1.79per cent drop from the previous session that closed at $82.22 per barrel.

    Following news of Israel carrying out a retaliatory attack on Iran, both benchmarks surged on Friday.

    The Brent crude price approached the $91 threshold amid concerns that a wider conflict would disrupt oil supplies in the Middle East, home to the majority of the world’s oil reserves. However, later on Friday, crude prices clawed back most of the gains after both sides downplayed the severity of the attack. I-G Mulls Establishment of N100bn Police Housing Fund

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    As concerns of a wider conflict eased despite unprecedented direct strikes by both sides, the oil market refocused on market fundamentals on the first day of the new week.

    Demand concerns stemming from uncertainties regarding the global economy continue to weigh on prices. Weak demand worries were also sparked by the rise in crude oil stocks in the US, the largest oil consumer in the world.

    While uncertainty regarding the timing of the Fed’s interest rate cuts continues, the dollar index reached 106.  The rise in the value of the US dollar makes oil expensive for buyers using other currencies, leading to reduced purchases and downward pressure on prices.

    Meanwhile, renewed US sanctions on Venezuela, which has an export capacity of around 600,000 barrels per day, has fueled supply concerns. The OPEC+ group could influence oil prices by returning some of the 2 million bpd supply it is currently keeping off the market.

    The tensions in the Middle East have highlighted the ebb and flow of the geopolitical risk premium in oil prices so far this month. Analysts believe that oil currently includes between $5 and $10 per barrel in premium to reflect a risk of escalation in the Israel-Iran conflict.

    The past week has illustrated how traders perceive geopolitical risk. Just as Brent Crude prices had eased to the upper $80s after the Iranian drone attack against Israel in the April 13-14 weekend, oil spiked by three per cent early on April 19 amid reports of an Israeli missile hit in Iran.

  • Oil prices dip on high crude stock

    Oil prices dip on high crude stock

    Oil prices fell yesterday after United States government data showed earlier that crude oil and fuel inventories rose by much more than expected on weak demand and lower oil exports. US crude stocks climbed by 5.8 million barrels in the week ended April 5, more than double of analysts’ expectations.

     Brent crude futures dropped 28 cents, or 0.3 per cent, to $89.14 per barrel, while US West Texas Intermediate (WTI) crude futures fell 35 cents, or 0.4 per cent, to $84.88. In the previous session, both Brent and WTI fell more than one per cent. Coming to domestic prices, crude oil futures last traded 0.18 per cent higher at $7,115 per barrel on the multi commodity exchange (MCX) platform.

     Refined products inventories rose unexpectedly with gasoline up by 700,000 barrels and distillate stocks by 1.7 million barrels. The US Energy Information Administration (EIA) data also showed a 2.1 million barrel per day (bpd) drop in oil product supplied, a proxy for fuel demand, and a 2.7 million bpd drop in crude oil exports.

    Separately, the U.S. EIA sharply raised its forecast for crude oil output. It now expects an increase of 280,000 bpd to 13.21 million bpd in 2024 – which is higher from its earlier forecast of a 20,000 bpd increase in output.

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     The US consumer price index (CPI) rose 0.4 per cent sequentially–higher than Wall Street estimates which faded away hopes of a rate cut in June, according to data released by the Labor Department’s Bureau of Labor Statistics,

     The commander of the Revolutionary Guard’s navy in Iran said it could close the Strait of Hormuz if necessary. About a fifth of the volume of the world’s total oil consumption passes through the strait daily.

     On Tuesday, Hamas said an Israeli proposal on a ceasefire did not meet demands of Palestinian militant factions, but it would study the offer further and deliver its response to mediators, according to news agency Reuters.

     A continuing conflict in the Middle-East could drag in other countries, particularly Hamas-backer Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC) cartel, led by Saudi Arabia.

     The US EIA said it expects Brent crude prices to average $88.55 a barrel in 2024, up from a previous forecast of $87 per barrel. Analysts said that crude oil experienced profit-taking amidst a stable dollar index and an increase in US bond yields. However, concerns regarding potential retaliation from Iran against Israel will push oil prices.

     ‘’We do not anticipate any significant downside in crude oil shortly. However, we do not foresee Brent crude reaching $100 levels, as we anticipate that OPEC may expand output by 0.5 million barrels per day if the crude oil market continues to be in deficit. Our base case is for crude to trade in a range from $85 to $95 levels in the near future,’’ said Amit Goel, Co-Founder & Chief Global Strategist, Pace 360.

    With demand holding up and growing in CY24, the crude oil market faces a deficit of almost one million bpd, highlighted commodity analysts.

    ‘’Expectations for the trading session suggest continued volatility in crude oil prices. Support for crude oil stands at $84.05–83.40, with resistance at $85.50-86.20 for today’s session. In terms of INR, crude oil is anticipated to find support around $7,020-6,930, while facing resistance at $7,190-7,280,’’ said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

  • Oil rises despite Persian Gulf tension

    OIL prices on Monday maintained muted reaction to mounting tensions between Iran and the West, moving modestly higher after Tehran’s announcement that it had seized a British-flagged oil tanker Friday.

    West Texas Intermediate futures rose one per cent to $56.32 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, was up 1.5 per cent at $63.39 a barrel on London’s ICE Futures exchange, after earlier getting as high as $64.03.

    Iranian forces on Friday captured a British-flagged tanker in the Persian Gulf, a move widely seen as retaliation for the U.K.’s seizure of an Iranian vessel off Gibraltar two weeks earlier. On Saturday, the U.K.-flagged tanker Stena Impero arrived in the Iranian port of Bandar Abbas with its 23 crew members still on board.

    Iran’s Revolutionary Guard has released footage showing some of its forces boarding the British tanker Stena Impero in the Strait of Hormuz.

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    Though tanker day rates have surged amid the hostilities around the world’s busiest oil-shipping route, crude prices are not reflecting the geopolitical drama that is playing out, analysts say.

    “Passing through the Strait of Hormuz involves considerable risks for international oil tankers, which in our opinion justifies a considerably higher risk premium on the oil price than is currently the case,” said Carsten Fritsch, an analyst with Commerzbank AG .

    Even after oil’s move higher yesterday, prices are down about five per cent over the past week. U.S. data showing a smaller-than-expected fall in oil stockpiles had a greater effect on the market than turmoil in the Middle East.

    The unexpected dissipation of Hurricane Barry last week also relieved pressure on oil prices, as supply disruptions were avoided. The Bureau of Safety and Environmental Enforcement said Saturday that workers had returned to nearly all of the manned platforms in the Gulf of Mexico and that only about three per centof offshore oil production remained shut-in.

  • Oil prices dip nearly 2 per cent

    Oil prices fell yesterday, after rising to five-month highs earlier this week on the Organisation of Petroleum Exporting Countries (OPEC)-led production cuts and free-falling Venezuelan output.

    International benchmark Brent futures were down $1, or 1.4 per cent, at $70.73 a barrel. Brent hit a more than five-month high at $71.78 on Wednesday.

    United States (U.S.) West Texas Intermediate crude oil futures fell $1.11, or 1.7 per cent, to $63.50 per barrel. WTI whit a high of $64.79 going back to Nov. 1 earlier this week.

    Selling accelerated yesterday morning as U.S. crude dropped below $63.71 a barrel, a technically-significant level at which some funds had stops in place, triggering automatic sales, said Bob Yawger, director of energy futures at Mizuho in New York.

    Read also: Oil rises above $71 on tight supply

    U.S. crude inventories surged by 7 million barrels to a 17-month high of 456.6 million barrels last week, the Energy Information Administration said on Wednesday. However, U.S. gasoline stocks fell by a whopping 7.7 million barrels, sending U.S. gasoline futures higher by 3.5 per cent on their close on Wednesday.

    U.S. crude oil production remained at a record 12.2 million bpd, making the United States the world’s biggest oil producer ahead of Russia and Saudi Arabia.

    The surging production and regional refinery outages have depressed prices of cash grades, putting more pressure on U.S. crude, said Yawger.

    U.S. West Texas Intermediate crude at Midland yesterday traded at the biggest discount to futures in almost four months after Phillips 66 closed a unit for maintenance at its Borger, Texas refinery, adding to a backlog of barrels as production climbs.

    Oil markets are tightening amid the increasing effectiveness of U.S. sanctions on Iran and Venezuela, the International Energy Agency said yesterday.

    U.S. sanctions and power outages pushed OPEC member Venezuela’s crude output to a long-term low of 870,000 bpd, IEA says. Two days ago, OPEC reported Venezuela’s March output sank to 732,000 bpd, citing independent sources, while figures provided by the country put production at 960,000 bpd.

    Iranian supply could fall further after May if, as many expect, Washington tightens its sanctions against Tehran.

    OPEC and its allies led by Russia are due to meet in Vienna on June 25-26 to set their policy.

     

     

  • Oil prices steady on trade talk hopes, OPEC cuts

    Oil prices were stable on Tuesday, supported by hopes that talks in Beijing between U.S. and Chinese officials might defuse trade disputes between the world’s biggest economies.

    OPEC-led supply cuts also tightened the markets.

    International Brent crude futures LCOc1 were at $57.42 per barrel at 0742 GMT, up 9 cents, or 0.2 per cent from their last close.

    U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were at $48.56 per barrel, up 4 cents, or 0.1 per cent.

    U.S. Commerce Secretary Wilbur Ross said on Monday that Beijing and Washington could reach a trade deal that “we can live with”.

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    Dozens of officials from China and the United States held talks in a bid to end a trade spat that has roiled global markets since last year.

    Despite optimism around the talks in Beijing, some analysts warned that the relationship between Washington and Beijing remained on shaky grounds, and that tensions could flare up again soon.

    “We remain concerned about the world’s most important bilateral relationship,” political risk consultancy Eurasia Group said in its 2019 outlook.

    “The U.S. political establishment believes engagement with Beijing is no longer working, and it’s embracing an openly confrontational approach…

    ”(And) rising nationalist sentiment makes it unlikely that Beijing will ignore U.S. provocations,” Eurasia Group said.

    There is also concern that a worldwide economic slowdown would dent fuel consumption.

    As a result, the hedge fund industry has cut back its bullish positions in crude futures.

    S&P Global Ratings said it had lowered its average oil price forecasts for 2019 by $10 per barrel to $55 and $50 per barrel, respectively.

    “Our lower oil price assumptions reflect slowing demand and rising supply globally,” said S&P Global Ratings analyst Danny Huang.

    Looking at oil supplies, 2019 crude prices have been supported by supply cuts from a group of producers around the Middle East-dominated OPEC as well as non-OPEC member Russia.

    “Crude oil prices have benefited from OPEC production cuts and steadying equities markets,” said Mithun Fernando, investment analyst at Australia’s Rivkin Securities.

    Looming over the OPEC-led cuts, however, is a surge in U.S. oil supply, driven by a steep rise in onshore shale oil drilling and production.

    As a result, U.S. crude oil production C-OUT-T-EIA rose by a whopping 2 million barrels per day (bpd) last year to a world record 11.7 million bpd.

    With drilling activity still high, most analysts expect U.S. oil production to rise further this year.

    Consultancy JBC Energy said it was likely that U.S. crude oil production was already “significantly above 12 million bpd” by early January.