Oil Falls as Supply Concerns Ease, Nigeria Cuts Price
Oil prices decreased on Thursday influenced by the impending price cap on Russian crude by G7 countries, easing tight supply fears. Nigeria has cut the official selling prices for December-loading crude reflecting a wider weakening in the market, while differentials for Angolan crude remained under pressure.
Trading data from the market shows that international benchmark Brent crude traded at $84.79 per barrel, a 0.73% decrease from the closing price of $85.41 a barrel in the previous trading session.
The American benchmark West Texas Intermediate (WTI) traded at $77.59 per barrel at the same time, a 0.45% drop after the previous session closed at $77.94 a barrel.
News that the price cap on Russian oil by the G7 countries would be above expectations alleviated the concerns of contracting supply and pushed oil prices lower. Although no official decision has been taken yet, the G7 countries are discussing setting a price cap of $65 to $70 per barrel for oil transported by sea from Russia.
Meanwhile, US commercial crude oil inventories decreased by 0.8% during the week ending Nov. 18, according to data released by the Energy Information Administration (EIA) late Wednesday. Inventories declined by around 3.7 million barrels to 431.7 million barrels, against the market expectation of a decrease of around 2.2 million barrels.
Nigeria Reduces Official Oil Price
Nigeria has cut the official selling prices for December-loading crude reflecting a wider weakening in the market, while differentials for Angolan crude remained under pressure. Qua Iboe’s price was cut to dated Brent plus 162 cents, from November’s 290 cents, according to Reuters.
In the same vein, offers of Angolan crude have been under downward pressure due to sluggish demand from China. Equinor was offering a cargo of Pazflor loading mid-December at dated Brent minus $2.50 a barrel, down over $1 on an offer a week earlier, and as of Wednesday had not sold the cargo.
One trader, normally a seller, thought differentials for other Angolan cargoes in January would not be as low as the Equinor offer indicated, Reuters reported. Dalia sold at around dated Brent parity for December loading, the trader said. The grade was not heard to have been offered yet for January loading.
Indian Oil Corp. is running a buy tender for crude loading around Jan. 10-20. The tender closes on Wednesday, with results expected on Thursday. Uruguay’s ANCAP is running a buy tender for Jan. 1-5 arrival. This tender also closes on Wednesday.
US commercial crude oil inventories decreased 0.7% during the week ending Oct. 28, according to data released by the Energy Information Administration (EIA) on Wednesday. READ: IMF Cuts Nigeria Growth Forecast
Inventories fell by around 3.1 million barrels to 436.8 million barrels, against the market expectation of a decrease of around 6 million barrels. Strategic petroleum reserves, excluded in commercial crude stocks, also fell by 1.9 million barrels to 399.8 million barrels last week, the data revealed. Gasoline inventories decreased by 1.3 million barrels to 206.6 million barrels over the same period.
Crude production declines
EIA data showed that US crude oil imports rose by 25,000 barrels per day (bpd) to around 6.21 million bpd during the week ending Oct. 28, while crude oil exports fell by around 1.2 million bpd to 3.93 million bpd.
US crude oil production, meanwhile, decreased by 85,000 bpd to approximately 12.35 million bpd over the same period. In the October Short-Term Energy Outlook (STEO), the EIA forecasted that crude oil output in the US would average 11.75 million bpd in 2022, up from 11.25 million bpd in 2021.
Crude oil output in the country in 2023 is forecast to reach 12.36 million bpd. #Oil Falls as Supply Concerns Ease, Nigeria Cuts Price
