Oil Prices Start Week on Softer Note | Business News

Oil Prices Start Week on Softer Note

31 Aug 2015 | Author: | No comments yet »

Changing trends challenge Nigeria to creatively utilse its crude – experts.

0124 GMT [Dow Jones] Crude-oil futures fell in early Asian trade Monday, easing from strong gains made towards the end of last week when oil prices rose 16-17% over just two trading sessions.Changing trends in global crude oil demand are creating rising uncertainty for Nigeria, as appeal for its product – ‘Bonny light’ continues to wane, with a growing focus on ‘heavy crude’ which is produced by countries including Saudi Arabia, Mexico and Angola.Oil prices steadied on Friday after bouncing back from six-and-a-half-year lows on recovering equities markets, strong U.S. economic growth and news of low crude supplies from Nigeria.Oil futures jumped 10 % on Thursday, within the largest one-day achieve in over six years, prompted by rallying inventory markets, information of diminished provides and obvious strikes by Venezuela to attempt to organize OPEC motion to curb the worldwide stoop in oil costs.

Oil futures rallied Thursday on the heels of a U.S. stock-market climb, with U.S. costs rebounding from more-than-six-year lows hit earlier this week to maneuver above $42 a barrel. “The current precipitous sell-off has been countered by probably the most emphatic bout of short-covering,” stated Matt Smith, director of commodity analysis at ClipperData. “Whereas some might attribute it to being within the slipstream of a rampant fairness rally, or right down to being in excessive oversold circumstances, the truth is that costs have been due a bounce.” West Texas Intermediate crude for supply in October jumped $three.45, or eight.9%, to $42.04 a barrel on the New York Mercantile Change.“It looks like based on commodity prices, China, wages not really picking up, that [Fed officials] are not getting any closer to meeting their inflation target and seems like they’re probably not going to be willing to go in September” with a rate hike, said Don Ellenberger, head of multi-sector strategies at Federated Investors in Pittsburgh. In a week of highly volatile trading Nymex crude gained 11.8% last week, and Brent crude gained 10.1%. “The swing in market sentiment has helped oil prices to recover from recent lows,” ANZ Bank ANZBY -1.20 % says. “The recovery in oil prices could be short-lived as the U.S. driving season is coming to end. Experts consequently say that for Nigeria to optimally sustain its economy under prevailing circumstances, it must come up with creative ways to deploy its crude. Shell’s Nigerian unit declared force majeure on Bonny Light crude oil exports on Thursday after shutting two key pipelines in the country due to a leak and theft.

Crude inventories fell 5.5 million barrels in the week to August 21, the biggest one-week decline since early June, according to government data that countered analysts’ expectations for an increase of 1 million barrels. “This was attributed to the increased import volume of naphtha and condensate, which was used as raw materials for petrochemical production and as replacement fuel for natural gas due to scheduled maintenance of the Malampaya gas facility”, the Energy department said. They suggest that Nigeria should begin to refine more of her crude locally and then export for optimum returns, and also veer more into extracting by-products such as petro-chemicals, fertiliser and ethanol among others, from it to boost the economy. Energy Information Administration released its official data on oil stockpiles. “While a renewed decline in drilling activity might provide some support for prices, at best they are only likely to grind a little higher over the next few years”, analysts at Capital Economics said in a note to clients. Heavy crude is capable of yielding higher volumes of derivatives such as Automotive Gas oil (otherwise known as diesel), as well as Naphtha, than is the case with Nigeria’s ‘Bonny light’, which was until recently preferred by most refiners.

Investor sentiment was shored up as upbeat U.S. financial knowledge helped within the Dow industrials Thursday. , the Shanghai Composite Index surged 5.three% to finish a five-day dropping streak. Global oil markets have fallen by a third since May and are still well under half their value a year ago thanks to a huge oversupply of fuel and sluggish demand. The more-active October futures fell 21 cents to $41.06. “For the oil markets, the focus remains on China, which set off a wave of emerging-market currency weakness when it de-pegged the yuan from the U.S. dollar last week”, Socié té Gé né rale said. Eklavya Gupte, a senior editor with Platts, who spoke on the current state of West Africa’s crude oil market, said refineries across the globe can now process heavy crude because of new technologies and that this has prompted many refinery operators across the world to look away from Nigeria and its ‘Bonny light’. The Power Info Administration reported fell greater than anticipated for the week ended Aug. 21, however gasoline inventories rose, opposite to some forecasts for a decline.

Gupte said a country like Angola for instance, has heavy crude, which is also sweet and because of this, the United States of America now buys more of Angolan crude than Nigerian. According to him , India is now the biggest buyer of Nigerian crude, about 20 per cent, because it has large refining capacity, on account of its huge population. The reported that economically struggling Venezuela has been ing different Group of Petroleum Exporting Nations (OPEC) members to push for an emergency assembly in coordination with Russia to provide you with a technique to cease the present oil worth rout. A studying on , in the meantime, confirmed that the U.S. financial system grew at a three.7% annual tempo, up from an preliminary estimate of progress at a extra modest 2.three% clip.

Analysts predict oil might now attain ranges not seen because the throes of the monetary disaster, pressured by a robust greenback and the anticipated return of Iranian oil to world markets. Bonnington said Nigeria is benefitting from the crisis in Libya because the traditional buyers of that country’s crude have now turned to Nigeria in the interim. However excessive petroleum-product inventories and a seasonal post-summer decline in refinery demand is a possible drag for oil costs in coming months. “U.S. crude-oil inventories are more likely to hit new highs in [the fourth quarter of]2015, and once more all through 2016 till one thing provides,” Citi Analysis stated in a report. US oil prices headed for their eighth consecutive week of falls on Friday, the longest losing streak since 1986, after a sharp drop in Chinese manufacturing increased worries over the health of the world’s biggest energy consumer.

All other factors being equal, a $1-per-barrel change in the price of crude oil will result in a change of 2.4 cents per gallon in the price of wholesale and retail gasoline. September gasoline jumped eight.three cents, or 6.1%, to $1.438 a gallon, rebounding from a 5.eight% drop a day earlier, whereas September heating oil added 9 cents, or 6.5%, to $1.471 a gallon. On its expiration day, the September contract for pure fuel traded at $2.675 per million British thermal models, down 1.eight cents, or zero.7%, following weekly provide knowledge.

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