Buzz It Up News

With Force Majeure on Nembe Oil Line, Nigeria Risks Revenue, Production Cuts


Global benchmark Brent crude futures rose 1.55 per cent to $57.74 per barrel while U.S. benchmark West Texas Intermediate traded up 1.3 per cent at $51.32 per barrel at the time of writing.

But on Monday, Turkish President Tayyip Erdogan threatened to cut off that pipeline in the wake of the Kurdish independence referendum.

With continued growth in demand and the belief the market is starting to rebalance and supply to tighten, the market is bullish for oil - at least for now. What's noteworthy about these moves is that they pushed oil 20% above its bottom in June, which means crude is now officially in bull market territory.

If this keeps USA oil prices relatively low, analysts say it could encourage more exports, which could lift prices for American crude closer to what it trades for on worldwide markets.

Meanwhile, there is an interesting wrinkle appearing in global oil markets: the price of Brent crude and West Texas Intermediate, the United States benchmark, are diverging.

Demand from China has been a crucial driver of the return to above $55 a barrel prices as the world's second largest economy builds its strategic petroleum reserve.




"The market is OK, but these levels are beginning to look a little precarious", said Robin Bieber, technical chart analyst at London brokerage PVM Oil Associates. Analysts at Goldman Sachs said in a Sept 21 note that the level of Brent backwardation - the premium for crude for delivery next month over that for delivery a year in the future - "is consistent with OECD inventories in days of demand cover falling to 5 per cent above their five-year average level".

OPEC and some key producers such as Russian Federation have agreed to reduce production by 1.8 million barrels a day by next March.

Oil prices burst out of the gate this week, rising more than 3% on Monday.

The Organization of the Petroleum Exporting Countries, Russia and several other producers have cut production by about 1.8 million barrels per day (bpd) since the start of 2017, helping lift oil prices by about 15 per cent in the past three months.

He said the oil firm had varied interests in seven deepwater concessions and successfully executed a Global Memorandum of Understanding (GMoU) with communities in OMLs 30 and 34, adding that NPDC achieved a major feat by successfully drilling and completing five horizontal wells in nine months in OML 26, leading to production of an additional 7, 000 bpd.

Not everyone agrees with Luckock, especially with the possibility that USA producers could ramp up production. Major oil producers convening in Vienna for an OPEC-led committee meeting on Friday boasted record compliance with their production-cut agreement, but, as expected, made a decision to wait a bit longer to see if any further action was needed. U.S. output is forecast to reach more than 10 million barrels a day next year, a almost 1.25 million barrel increase from the start of 2017, according to the U.S. Energy Information Administration. OPEC also jumped on the opportunity to push prices higher after the storm, with Saudi Arabia, particularly, announcing more supplies than initially committed.

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