Oil Rises as Nigeria Expects Output Issues to End in December

Oil Rises as Nigeria Expects Output Issues to End in December

Oil rises Tuesday as Nigeria sees end to output issues by the end of December 2021, according to Mele Kyari, Nigerian National Petroleum Corporation Group Managing Director who speaks at Industry event.

Low oil inventory levels, supported by expectations that the Organisation of Petroleum Exporting Countries will shy away from increasing supplies, pushed oil prices upward after a slowdown on Monday.

International benchmark Brent crude jumped to $82.89 per barrel after gaining 1.02% from $82.05 a barrel on Monday. Also, the American benchmark West Texas Intermediate (WTI) hits $80.36 per barrel, up 0.79% from the previous session.

Nigeria’s crude oil and condensate output is now about 1.8 million barrels per day and is likely to overcome production issues seen last month by the end of December, the head of state petroleum company NNPC said on Tuesday.

Nigeria underperformed quotas for months as Africa’s largest oil producer suffered a drop in output last month, according to OPEC figures, despite an agreement by the group and its allies to raise output.

Speaking at an industry event, Kyari said the country’s condensate output is about 350,000 barrels per day, implying crude production of about 1.55 million barrels per day

Crude prices had fallen in the international market as the United States (U.S) is facing increasing pressure to address rising gasoline prices through a release from its strategic petroleum reserves, driving crude oil prices lower at the start of the trading week, Australia’s ANZ Bank said in a Tuesday note.

U.S Senate Majority Leader Charles Schumer called on President Joe Biden to tap the reserves to provide consumers with immediate relief, the bank noted. Meanwhile, Energy Secretary Jennifer Granholm confirmed that Biden is considering the move.

Pressures mount as OPEC stays firm on its current pace of increases, with producers such as Saudi Arabia and the United Arab Emirates saying at an industry gathering that the increases are enough and the market is set to switch to a surplus early next year, according to ANZ Bank.

Also affecting sentiment are new travel restrictions in Europe, including a lockdown for unvaccinated people in Australia and a work from home recommendation in Ireland, the bank said. Germany is also preparing to impose restrictions as COVID-19 cases rise in the country, ANZ Bank said, citing reports.

Further in Europe, gas prices rose as Russia signalled that it is keeping a tight rein on supply, with Gazprom failing to add capacity for December for Yamal-Europe flows at an auction, according to the bank.

The Russian gas producer did not book any capacity through Belarus, Poland and Ukraine, ANZ Bank said.

Dutch front-month gas futures rose nearly 9% to 79.95 euros per megawatt-hour on concerns over tight supply, which also pushed Asian prices higher, with Japan-Korea Market for December reaching $31.61 per million British thermal units, the bank said.

Providing additional support to prices, opportunistic buying from consumers ramped up in efforts to stockpile winter cargo in anticipation of higher heating demand, ANZ Bank noted. This follows forecasts of a colder than normal winter, the bank said.

US Natural Gas Stocks 3% below Average in Early November, EIA Report

US natural gas in storage totalled 3,618 Bcf on Nov. 5, 3% below the recent average, as natural gas stocks remained below the five-year average since mid-February, the US Energy Information Administration said in a Friday report.

Storage levels approached average in late October and early November, which is usually when inventories are at their highest and when gas begins to be withdrawn as colder weather pulls up demand, the agency said. Recently, eight consecutive weeks of relatively large net injections narrowed the gap with five-year average inventories to just 3% as of Nov. 5, the EIA said.

While the EIA estimates less US working natural gas in storage than the five-year average through the winter, the forecast for inventories remains uncertain as it depends on gas demand this winter, particularly for space heating in the residential and commercial sectors, and on supply conditions as producers respond to rising gas prices, according to the agency.

China’s Refinery Output Rebounds in October Amid Fuel Crunch

China’s daily crude oil throughput bounced back in October, after hitting its lowest level in more than a year a month ago, as refiners ramped up operations on high fuel prices and strong demand, Reuters reported Monday.

Processing volumes in October came in at 58.4 million tonnes, or 13.75 million barrels per day, an increase from 13.64 million b/d in September, Reuters reported, citing data from the National Bureau of Statistics.

“Refiners have strong incentives to crank up operations as refining margins remain flat amid high diesel and gasoline prices. But operations could be curbed in late November due to winter pollution campaign,” Reuters quoted analysts from JLC Consultancy as saying in a note.

Despite a rise in oil prices in a tight market, experts believe that the market is focused on the possibility of a rise in oil supply from various sources at a time when COVID-19 cases globally are rising.

The Organization of the Petroleum Exporting Countries cut its world oil demand forecast for the fourth quarter by 330,000 barrels per day last week, compared to its October forecast.

The sector is awaiting the International Energy Agency’s (IEA) monthly oil market report. In its previous report, the IEA estimated that global oil demand would increase by 5.5 million barrels per day (bpd) this year and 3.3 million bpd next year. #Oil Rises as Nigeria Expects Output Issues to End in December

Read Also: Oil Prices Edge Higher on Lack of OPEC+ Action

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