Nigerian Oil Sells Cheaper as Unsold Cargoes Increase
Amidst global economic uncertainties, Nigerian crude oil differentials slipped again as sales in key markets in Europe and India have slowed. Numbers of cargoes that have remained unsold increase as demand from major buyers drop.
This could have a run on fiscal performance, according to analysts, noting that the government has tried unsuccessfully to diversify earnings. Revenue receipts from crude oil sales still account for the largest chunk of total income.
Coincidentally, Nigeria has not been meeting its quota due to weak oil investment in the past decade. Offers for light sweet Nigerian crude slipped as Indian buying waned and the European market stayed well supplied with competing U.S. crude, according to a Reuters report.
Nigeria’s Qua Iboe differentials slipped with offers falling to below-dated Brent plus $2. A few under 30 cargoes of July-loading crude remained unsold as August programmes were nearly out in full.
In the crude oil market, prices increased on Thursday on the back of demand euphoria after the massive decline in the crude oil stockpiles in the U.S, the world’s largest oil-consuming country, hinting at rising demand at the beginning of the travel season.
International benchmark Brent crude traded at $74.52 per barrel, a 0.26% gain from the closing price of $74.24 a barrel in the previous trading session on Wednesday. The American benchmark West Texas Intermediate (WTI) traded at the same time at $69.90 per barrel, up 0.49% from the previous session’s close of $69.56 per barrel.
US commercial crude oil inventories declined by 2.1% during the week ending June 23, according to data released by the Energy Information Administration (EIA) late Wednesday. Inventories fell by around 9.6 million barrels to 453.7 million barrels, relative to the American Petroleum Institute’s expectation of a fall of 2.4 million barrels.
Strategic petroleum reserves, which are excluded from commercial crude stocks fell by about 1.4 million barrels to 348.6 million barrels last week, the data revealed.
Despite rising crude oil inventories, the unexpected gasoline stockpiles limited the price uptick. Upward movement of the prices was timid after the world’s top central banks’ leaders’ highlighted further monetary policy tightening.
The U.S. Federal Reserve Chair Jerome Powell said that he anticipates further monetary policy constraints will be implemented.
For her part, Christine Lagarde, President of the European Central Bank (ECB) said: “We have not yet seen the full impact of the cumulative rate hikes we have decided on since last July – amounting to 400 basis points. But our job is not done. Barring a material change to the outlook, we will continue to increase rates in July.” # Nigerian Oil Sells Cheaper as Unsold Cargoes Increase
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