Stumbling dollar and attacks on Nigeria’s oil and gas facilities by the Niger Delta Avengers (NDA), which also tightened crude oil supplies to the international market, pushed up Brent crude oil prices yesterday above $50 per barrel, even though signs of recovering US production capped the gains.
Brent crude futures were up 59 cents at $50.23 a barrel, while the US crude futures, West Texas Intermediate (WTI) were up 57 cents at $49.19 a barrel.
Reuters quoted oil traders as saying that the prices rose on a sharp fall in the dollar on Friday after weak US jobs data sparked concerns over the state of the world’s biggest economy, cutting expectations of a near-term cut in US interest rates.
A weaker dollar support fuels demand in the rest of the world as it makes dollar-traded oil imports cheaper.
The Muslim holy month of Ramadan began yesterday and is seen as supportive of prices as driving demand picks up in most Muslim-dominated countries.
Traders said prices were also propped up by attacks on oil infrastructure in Nigeria, which has already sent the country’s output to more than 20-year lows.
So far, supply cuts like those in Nigeria or Libya, have been met by rising output in the Middle East, especially Iran, which has ramped up output since the end of international sanctions against it in January.
But Iran is returning to the international oil markets more quickly than expected and is already returning to its maximum production capacity.
This means that further disruptions in global supplies might not be compensated by rising Iranian output.
Oil’s price rally, however, was capped on signs of increased output in the United States where energy firms this week added rigs drilling for oil for the second time this year, energy services company Baker Hughes Inc (BHI.N) said on Friday.
Rising prices have encouraged producers to cautiously increase activity. Drillers added nine oil rigs in the week to June 3, raising the rig count to 325 but still well below the 642 at work a year earlier, Baker Hughes said.
US crude oil production has fallen by 5.4 per cent since January and by almost 10 per cent since mid-2015 to 8.74 million barrels per day.
FG Insists Production Stands at 1.6m bpd
In Nigeria, the Minister of State for Petroleum Resources, Ibe Kachikwu, said yesterday in Abuja that in spite of the several shut-ins arising from militant activities in the Niger Delta, the country’s production output was 1.6m bpd.
According to him, “In terms of production, we are roughly at about 1.5 million – 1.6 million barrels a day, down from 2.2mbd which is the basis of this year’s budget and if peace reigns, obviously between now and August we will be able to recover substantial portion of this production so that the budget doesn’t suffer.”
OANDO gets N94.9bn 5-year medium term loan from 10 banks
Meanwhile, a consortium of 10 banks yesterday in Lagos signed an agreement to jointly provide a N94.9 billion five-year Medium Term Loan (MTL) facility for Oando Plc, to assist the company meet its financial obligations in the low crude oil price environment.
The banks are Access Bank Plc, Diamond Bank Plc, Ecobank Nigeria Limited, First City Monument Bank Plc, Fidelity Bank Plc, Keystone Bank Plc, Stanbic IBTC Bank Plc, Union Bank of Nigeria Plc, Zenith Bank Plc and FBN.
The facility, which is coming on the heels of the investment of the Helios/Vitol Group (HVI) into the downstream operations of Oando, will also help the company restructure some of its outstanding debts.
Source: Thisday
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