Oil Falls as Nigeria’s Bonny Light Loading Jumps
Oil falls on Monday as Nigeria’s key programmes emerged showing a rise in Bonny Light loadings, steady Bonga and Forcados programmes. Nigeria’s August loading programme for Bonny Light will be higher than July at about 124,000 barrels per day (bpd) while Bonga will be steady at 92,000 bpd. Similarly, Forcados will be steady at about 246,000 bpd.
Ahead of this week’s meeting of the Organisation of Petroleum Exporting Countries and allies (OPEC+) Group meeting, oil price trend southward but market sentiment remains positive. OPEC+ is scheduled to meet on July 1 as analysts said they expect to see production quotas for August raised by half a million barrels or more.
West Texas Intermediate crude oil for August delivery was last seen down US$0.20 to US$73.85 per barrel, while August Brent crude, the global benchmark, dropped US$0.25 to US$75.93.
The drop comes as the OPEC and its allies meet on Thursday, with analysts expecting the group to boost output by at least 500,000 bpd to meet rising demand as vaccination programs in North America and Europe ease pandemic restrictions and boost demand for gasoline and aviation fuel.
OPEC+ had revealed plan to incrementally raised output in the second half of 2021 as pandemic-induced stress eases.
“It seems that the market is not even alarmed by the possibility that OPEC might raise production – be it by 500,000 or even 1 million barrels per day after the increase of 800,000 barrels per day already agreed in July.
“For one thing, demand appears very strong regardless of the mobility restrictions (some of which have been reintroduced) because of Covid-19. And for another, supply is only increasing gradually in other countries,” Commerzbank analyst Eugen Weinberg said in a release.
Prospects for a return of a million barrels per day of Iranian supply to the world market are dimming. Though indirect talks between Iran and the United States to revive the 2015 nuclear agreement will continue this week, the United States carried out air strikes on militias in Iraq and Syria that are backed by Iran.
Early fall on Monday occurred after crude prices hit their highest since 2018 as a spike in COVID-19 cases in Asia and Europe put a brake on the rally before this week’s OPEC+ meeting.
On Friday, both closed at their highest since October 2018 as fuel demand rebounded on strong economic growth and increased travel during the Northern Hemisphere summer.
All eyes will be on the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, to see what happens at their meeting on Thursday.
Following previous cuts, OPEC+ was returning 2.1 million barrels per day (bpd) of oil supply to the market from May to July and could decide to add more barrels in August after crude prices last week rose for a fifth week in a row with recovering demand.
OPEC’s forecasts point to an oil supply deficit in August and in the rest of 2021 as economies recover from the pandemic, suggesting OPEC+ has room to raise output.
Rising COVID-19 infections in Asia put a dampener on some oil demand outlooks. Indonesia is battling record-high cases, Malaysia is set to extend a lockdown and Thailand has announced new restrictions.
Australia also reported on Sunday one of the highest numbers of locally acquired coronavirus cases this year, triggering lockdowns in some cities.
Iran and the United States, meanwhile, were expected to resume indirect talks on reviving a 2015 pact over Tehran’s nuclear work.
Agreement could lead to a lifting of U.S. sanctions and more Iranian crude on the market. But tensions rose after U.S. air strikes on Sunday against Iran-backed militias in Iraq and Syria.
On Monday, Iran said it has yet to decide whether to extend a monitoring deal with the U.N. nuclear watchdog which lapsed last week.
Oil Falls as Nigeria’s Bonny Light Loading Jumps
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