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INTERESTED IN NIGERIA CRUDE OIL
OIL MARKETS
This blog is an indepth and frequently critical analysis of topical issues in the global oil markets as they relate to Nigeria
An analysis on global oil market and how they effect Nigeria's economic and financial well being. Nigeria's economy is inextricably linked to these markets and the decisions key actors take to safeguard and promote their own economic objectives. Nigeria principally seeks to excersize its own influence on the global stage through its membership of OPEC. But just how effective is OPEC? Do the key actors share similar policy objectives or political alignments with Nigeria. Has OPEC+ (inclusion of Russia) altered the organisations focus?
The blog also analyses the broader issues in respect of fossil fuels, geopolitical events and their ramifications for Nigeria. We critique the Nigerian government policy decision making and other legislation and the effect it has on Nigeria's prosperity
COVID19 THE CHINESE PUZZLE It is by definition complex, intricate, requires ingenuity and is perplexing. Out of a clear blue sky just as market analysts had snugly settled down with their forecast outlook for 2020, it emerged without warning, a shock that the market is still yet to fully comprehend. Despite the initial slump in global oil benchmarks the price of Brent rebounded by over 10% last week. This week ending, West Texas Intermediate crude for April delivery CLJ20, -1.99% on the New York Mercantile Exchange fell $1.13, or 2.1%, to $52.75 a barrel, while April Brent crude BRNJ20, -2.23% lost $1.37, or 2.3%, to trade at $57.94 a barrel on ICE Futures Europe. Coronavirus fears returned to the market as the pervading sentiment seems to be that the virus still has a course to run with no clear sign it has peaked. With Refiners in China reported as processing 25% below seasonal averages and an estimated reduction in transport fuel consumption of 30-40% the logical expectation would be that oil prices continued on their downward spiral. Apple Inc. have issued what is essentially an impartial prognosis on the Chinese economy. A warning that would normally be regarded as a…
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Russia seem to have won the argument and OPEC+ will meet as scheduled in Vienna on March 5th- 6th. It could be that a resurgence in the Brent oil price benchmark which has seen it reach $59.16/b as of 1719 GMT today, up 11% from the February 10th low has alleviated the pressure . However although the front month ICE future has rebounded it is still down over 10% year to date and far below the level most OPEC members states need to balance their domestic budgets. Russia has been reluctant to agree to Saudi requests for members of the alliance to meet in mid-February, as the effects of the coronavirus outbreak caused oil prices to slump. Earlier in the month an OPEC+ technical committee recommended that the coalition deepen its existing 1.7 million b/d production cut accord by an additional cut of 600,000 barrels per day through the end of the second quarter to offset any demand impact from the COVID-19 infection. The Saudi energy minister Prince Abdulaziz bin Salman who reportedly spoke to the Russian energy minister Alexander Novak by phone on Tuesday acknowledged on Wednesday that he was unable to convince his Russian counterpart. Prince Abdulaziz bin…
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A slower decline in refined product prices compared to crude oil saw refinery margins strengthen. Though Chinese refining margins stayed firmly in negative territory, with Arab Medium cracking margins averaging minus $1.84/b, up from the minus $3.98/b the week earlier.The decline in the demand for transport fuel created by COVID-19 saw the number of Chinese transport passengers for all venues down by 30%-40%, according to data released by the Chinese Minister of Transport and reported by Platts S&P . It remains to be seen whether the return of Chinese workers to work will make an appreciable difference to refined pproduct demand. The weaker Chinese demand is creating external inventory builds too as refined product inventories in Fujairah rose 12% week on week to reach 24.252 million barrels, according to data released last week by the Fujairah Oil Industry Zone. Inventories in Singapore also rose marginally, with gasoline and light distillates up 3% to 7.332 million barrels, while middle distillates rose 1% to 4.058 million barrels, according to Enterprise Singapore data. Singapore cracking margins for Dubai rose to average $1.32/b for the week ended February 7, up from the minus 10 cents/b the week earlier, Platts Analytics data showed. Refining margins…
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ROYAL DUTCH SHELL SHELF OIL BUY BACK It has emerged that in the wake of the coronavirus Royal Dutch Shell , the world’s second-largest listed oil and gas companyhas now decided to slow down the rate of its planned share buy back. Shell embarked on a $25 billion buy back programme on July 26, 2018, the biggest ever undertaken. In a statement to the market Shell chief executive Ben van Beurden explained “We remain committed to prudent capital discipline supported by world-class project delivery and are looking to further strengthen our balance sheet while we continue with share buybacks,” He has sought to re-assure investors as the 'macro' becomes increasingly fragile, ...“Our intention to complete the $25 billion share buyback programme is unchanged, but the pace remains subject to macro conditions and further debt reduction.” The price shock caused by the coronavirus and the difficulty in determining the extent of its impact on the market has forced producers to adopt a much more cautious approach with their cash. Royal Dutch Shel is currently undertaking the world’s largest ever shareholder buyback, returning cash made from a 2014 takeover of gas firm BG Group. Up until now Shell have handed back about…
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Saudi Arabia has opened a discussion about moving the upcoming OPEC+ policy meeting to early February from March, four OPEC+ sources said, after a swift slide in oil prices alarmed Riyadh. Worries over the economic impact of China’s coronavirus has rattled global markets, helping send the price of crude down to around $58 a barrel from above $65 a barrel on Jan. 20. No final decision over the new date of the meeting has been made, and not all OPEC members are on board yet, with Iran a possible contender to oppose the move, the OPEC+ sources said.Russia was also not keen on advancing the meeting to early February, though it was not immediately clear whether Moscow had officially communicated its final position, the sources said. One Russian oil source suggested that Moscow may want to reassure the market it is willing to advance the meeting to prevent oil prices from falling further. OPEC officials and investors are trying to assess what economic damage the virus mightAt 10:52 a.m. EDT on Thursday, WTI Crude was down 2.38 percent at $52.06 and Brent Crude was trading down 2.39 percent at $57.52, both flirting with bear market territory. Since the outbreak of…
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