Day: April 16, 2020

The international oil benchmark, Brent crude, wobbled on Monday, despite the historic oil production cut deal sealed by the Organisation of Petroleum Exporting Countries and its allies on Sunday.

The OPEC, Russia and other countries agreed on Sunday to cut output by 9.7 million barrels per day in May and June, representing about 10 per cent of global supply.

The deal was expected to prop up prices but Brent crude rose, then fell and rose again on Monday. It was up by $0.47 to $31.95 per barrel as of 6.40 pm Nigerian time.

Saudi Arabia, OPEC’s de facto leader, on Monday set its May official selling prices for crude, selling oil to Asia more cheaply and keeping prices flat for Europe while raising them for the United States.

The US President, Donald Trump, made a case on Monday for doubling the oil supply cuts just approved by OPEC+ to 20 million bpd, saying the move would restore the energy sector faster.

He said on Twitter, “Having been involved in the negotiations, to put it mildly, the number that OPEC+ is looking to cut is 20 million barrels a day, not the 10 million that is generally being reported.

“If anything near this happens, and the world gets back to business from the Covid-19 disaster, the energy industry will be strong again, far faster than currently anticipated.”

His tweet did not appear to move oil markets, which were waiting for greater clarity on the deal reached on Sunday after Saudi Arabia, under pressure from the US, ended a four-day stalemate with Mexico that threatened to escalate a price war in the middle of the coronavirus crisis, according to S&P Global Platts.

Under the deal announced on Sunday, the 23-country OPEC+ alliance rein in 9.7 million bpd of crude oil production for May and June – down from 10 million bpd originally envisaged, as Mexico was allowed a more generous quota.

Outside of OPEC+, Canada has signalled a willingness to cut and Norway said it would decide about its cut “in the near future”, according to Reuters.

Source: https://www.energymixreport.com/oil-price-hovers-around-31-despite-opec-cut-deal/

Nigeria may earn about $10.61bn from crude oil sales between May and December this year following latest decision by members and non-members of the Organisation of Petroleum Exporting Countries to cut production.

Also, the country will earn about $22.74bn from crude oil between January 2021 and April 2022 going by the volume of crude oil curtailment to be implemented by Nigeria during the 16-month period, as agreed by OPEC+.

These earnings are based on the $30/barrel average price of Brent, the crude against which Nigeria’s oil is priced.

Crude oil price in Nigeria’s 2020 budget was recently rebased from $57 to $30 following the crash in global oil prices occasioned by the impact of COVID-19.

In the OPEC+ agreement, Nigeria will join the group to cut supply by 9.7 million barrels per day between May and June 2020, eight million barrels per day between July and December 2020 and six million barrels per day from January 2021 to April 2022.

Minister of State for Petroleum Resources, Timipre Sylva, explained that based on reference production of Nigeria for October 2018 of 1.829 million barrels per day of dry crude oil, Nigeria would now be producing 1.412 million barrels per day, 1.495 million barrels per day and 1.579 million barrels per day respectively for the corresponding periods in the agreement.

At a production of 1.412 million barrels per day for 30 days in May 2020, going by Sylva’s explanation, Nigeria will be producing about 42.36 million barrels for the month.

It will also produce the same volume in June, bringing the total volume for both months to 84.72 million barrels.

With an average cost of $30 per barrel, Nigeria will therefore earn $2.54bn from crude in May and June 2020.

The country is to produce 1.495 million barrel per day from July to December 2020, which is a little above 180 days for the six-month period, hence total crude production during the period will be 269.1 million barrels, valued at $8.1bn.

It therefore implies that from May to December 2020, the country will earn $10.61bn.

Sylva, in his breakdown on Nigeria’s production cut in relation to the agreement by OPEC+, stated that from January 2021 to April 2022, Nigeria would be producing 1.579 million barrels daily.

This means that the country will produce 757.92 million barrels during the 16-month period and if the $30 average benchmark price for Brent persists, the country will earn $22.74bn.

Oil prices, however, had been fluctuating and operators believe that the commodity will increase beyond the $30 per barrel price once OPEC+ and other G20 countries start implementing the agreed cuts in crude oil production.

Source:  https://www.energymixreport.com/nigeria-to-earn-10-61bn-in-eight-months-from-crude-production-cuts/

Despite the oil cut initiative of the Organisation of Petroleum Exporting Countries, OPEC, and non-OPEC members, the price of Bonny Light, Nigeria’s premium oil grade only rose marginally from $23.19 to $23.25 per barrel, yesterday.

The prices of other crudes, including Brent and OPEC Basket also remained low at $32.05 and $21.19 per barrel respectively.

Investigation by Vanguard showed that it would take a much longer time for the market to respond to the oil cut as the market was saturated with excess oil from many nations, including Mexico, which has already opted out of the accord.

Moved to tackle the prolonged instability in the market, the 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting held via video conference, on Sunday, April 12, 2020, had agreed to, “Adjust downwards their overall crude oil production by 9.7 mb/d, starting on May 1, 2020, for an initial period of two months that concludes on June 30, 2020. For the subsequent period of 6 months, from July 1, 2020 to December 31, 2020, the total adjustment agreed will be 7.7 mb/d.”

The Meeting also agreed that this “will be followed by a 5.8 mb/d adjustment for a period of 16 months, from January 1, 2021 to April 30, 2022. The baseline for the calculation of the adjustments is the oil production of October 2018, except for the Kingdom of Saudi Arabia and The Russian Federation, both with the same baseline level of 11.0 mb/d.”

Source:  https://www.energymixreport.com/bonny-light-crude-price-remains-low-at-23-25-per-barrel/

A total of 60 Nigerian crude oil cargoes have not been sold despite the reduction of the official selling prices by the Nigerian National Petroleum Corporation.

A glut of Nigerian and Angolan crude weighed on the market on Tuesday with demand from China slower than in the last few weeks, Reuters reports.

“It’s a buyer’s market right now,” one trader was quoted as saying, adding that nothing was shifting.

According to Reuters, the glut of unsold Nigerian oil was around 60 cargoes for April and May, and cargoes of Qua Iboe and Bonny Light crude continued to be offered at around dated Brent minus $3.

The Nigerian National Petroleum Corporation was reported in March to have cut its April official selling prices for Bonny Light and Qua Iboe, two of the nation’s major grades, by $5 per barrel to dated Brent minus $3.29 and minus $3.10 per barrel, respectively.

Source:  https://www.energymixreport.com/sixty-nigerian-oil-cargoes-unsold-despite-price-cut/