Economy
Oil Bullish as US Fuel Demand Improves Amid Tight Supply
By Adedapo Adesanya
Oil prices continued the bullish run on Wednesday as they advanced further from improved fuel demand in the United States, backing expected demand growth and tighter supply.
Brent crude gained 31 cents or 0.25 per cent to trade at $123.90 per barrel while the US West Texas Intermediate (WTI) crude appreciated by 20 cents or 0.16 per cent to $122.30 per barrel.
Even though the US Energy Information Administration (EIA) reported a crude oil inventory build of 2 million barrels for the week to June 3, crude in the Strategic Petroleum Reserve fell by a record amount as refiners’ inputs rose to their highest since January 2020 compared with the 1.5 million barrels of the previous week, leaving inventories at 416.8 million barrels, which was some 15 per cent below the five-year average for this time of the year.
As a growing number of analysts revise their oil price forecasts upwards, the EIA also reported mixed inventory data for fuels.
In gasoline (petrol), the EIA estimated an inventory decline of 800,000 million barrels for the week to June 3, which compared with a draw of 700,000 barrels for the previous week.
Production averaged 10 million barrels per day last week, which was slightly higher than the average for the previous week.
Higher prices were also supported by the expectation of China easing the COVID restrictions, translating into higher demand and imports this summer.
Good news came as the world’s largest oil importer as its stocks traded at a two-month closing high, further signifying anticipation of better days following months of lockdown over COVID-19.
On the supply side, traders noted several countries could face problems boosting output.
The energy minister of the United Arab Emirates (UAE), Mr Suhail al-Mazrouei said efforts by the producer alliance group known as OPEC+ have not been encouraging.
“According to last month’s report, we have seen the conformity (to output cuts) of the OPEC+ group and the conformity was more than 200 per cent,” he said, noting the group was currently 2.6 million barrels per day short of its target.
Since OPEC+ started reversing last year the record cuts in April 2020, the group has been consistently struggling to meet its production quota as many members lack spare capacity or investment to increase production.
OPEC’s African members, Nigeria and Angola, are struggling with their targets, while the leader of the non-OPEC producers in the pact, Russia, is trying to stop a production decline as its oil is now under sanctions, bans, and embargoes in the West.
The alliance decided last week to accelerate its monthly oil production increase to 648,000 barrels per day for July and August as the group looks to compensate for falling production in Russia amid expectations of strong fuel demand this summer.
The International Energy Agency (EIA), meanwhile, warned that Europe, which has sanctioned Russia following its invasion of Ukraine, could face energy shortages.
By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries (OPEC) has once again trimmed its 2024 and 2025 oil demand growth forecasts.
The bloc made this in its latest monthly oil market report for December 2024.
The 2024 world oil demand growth forecast is now put at 1.61 million barrels per day from the previous 1.82 million barrels per day.
For 2025, OPEC says the world oil demand growth forecast is now at 1.45 million barrels per day, which is 900,000 barrels per day lower than the 1.54 million barrels per day earlier quoted.
On the changes, the group said that the downgrade for this year owes to more bearish data received in the third quarter of 2024 while the projections for next year relate to the potential impact that will arise from US tariffs.
The oil cartel had kept the 2024 outlook unchanged until August, a view it had first taken in July 2023.
OPEC and its wider group of allies known as OPEC+ earlier this month delayed its plan to start raising output until April 2025 against a backdrop of falling prices.
Eight OPEC+ member countries – Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman – decided to extend additional crude oil production cuts adopted in April 2023 and November 2023, due to weak demand and booming production outside the group.
In April 2023, these OPEC+ countries decided to reduce their oil production by over 1.65 million barrels per day as of May 2023 until the end of 2023. These production cuts were later extended to the end of 2024 and will now be extended until the end of December 2026.
In addition, in November 2023, these producers had agreed to voluntary output cuts totalling about 2.2 million barrels per day for the first quarter of 2024, in order to support prices and stabilise the market.
These additional production cuts were extended to the end of 2024 and will now be extended to the end of March 2025; they will then be gradually phased out on a monthly basis until the end of September 2026.
Members have made a series of deep output cuts since late 2022.
They are currently cutting output by a total of 5.86 million barrels per day, or about 5.7 per cent of global demand. Russia also announced plans to reduce its production by an extra 471,000 barrels per day in June 2024.
By Aduragbemi Omiyale
A minority equity stake in Chappal Energies Mauritius Limited has been acquired by a Nigerian energy firm, Aradel Holdings Plc.
This deal came a few days after Chappal Energies purchased a 53.85 per cent equity stake in Equinor Nigeria Energy Company Limited (ENEC).
Chappal Energies went into the deal with Equinor to take part in the oil and gas lease OML 128, including the unitised 20.21 per cent stake in the Agbami oil field, operated by Chevron.
Since production started in 2008, the Agbami field has produced more than one billion barrels of oil, creating value for Nigerian society and various stakeholders.
As part of the deal, Chappal will assume the operatorship of OML 129, which includes several significant prospects and undeveloped discoveries (Nnwa, Bilah and Sehki).
The Nnwa discovery is part of the giant Nnwa-Doro field, a major gas resource with significant potential to deliver value for Nigeria.
In a separate transaction, on July 17, 2024, Chappal and Total Energies sealed an SPA for the acquisition by Chappal of 10 per cent of the SPDC JV.
The relevant parties to this transaction are working towards closing out this transaction and Ministerial Approval and NNPC consent to accede to the Joint Operating Agreement have been obtained.
“This acquisition is in line with diversifying our asset base, deepening our gas competencies and gaining access to offshore basins using low-risk approaches.
“We recognise the strategic role of gas in Nigeria’s energy future and are happy to expand our equity holding in this critical resource.
“We are committed to the cause of developing the significant value inherent in the assets, which will be extremely beneficial to the country.
“Aradel hopes to bring its proven execution competencies to bear in supporting Chappal’s development of these opportunities,” the chief executive of Aradel Holdings, Mr Adegbite Falade, stated.
By Adedapo Adesanya
Afriland Properties Plc helped the NASD Over-the-Counter (OTC) Securities Exchange record a 0.04 per cent gain on Tuesday, December 10 as the share price of the property investment rose by 34 Kobo to N16.94 per unit from the preceding day’s N16.60 per unit.
As a result of this, the market capitalisation of the bourse went up by N380 million to remain relatively unchanged at N1.056 trillion like the previous trading day.
But the NASD Unlisted Security Index (NSI) closed higher at 3,014.36 points after it recorded an addition of 1.09 points to Monday’s closing value of 3,013.27 points.
The NASD OTC securities exchange recorded a price loser and it was Geo-Fluids Plc, which went down by 2 Kobo to close at N3.93 per share, in contrast to the preceding day’s N3.95 per share.
During the trading session, the volume of securities bought and sold by investors increased by 95.8 per cent to 2.4 million units from the 1.2 million securities traded in the preceding session.
However, the value of shares traded yesterday slumped by 3.7 per cent to N4.9 million from the N5.07 million recorded a day earlier, as the number of deals surged by 27.3 per cent to 14 deals from 11 deals.
Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 million.
Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.
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