Apparently wary about further increasing domestic stocks, China is being observed in an unusually slow buying of heavier grades from other parts of Africa, preferring sweet crude that is boosting Nigerian crude sale.
Sweet crude, which is low in sulfur, is cheaper to refine, and does not have long storage value.
Iraq is expected to divert crude oil exports from its southern terminals by mid-July; mainly its Basra Light flows.
The planned exports will go mostly to Asia, making a dearth of sour oil in Europe even more extreme and convincing refiners to switch to lighter, sweeter grades.
The shift is due to boost Nigerian grades, but prices remained steady, while vast volumes of relatively cheap light U.S. oil continues to dominate European markets.
Tens of millions of barrels of crude and other oil products stored on tankers at sea due to the coronavirus crisis are being sold, in a sign fuel demand is recovering as lockdowns ease, shipping sources say.
Chinese state buyers continue to hold off on buying Angolan crude due to vast domestic stocks, with independent refiners providing little relief.
Yesterday, traders cited a lack of reduction to prices for August-loading barrels, which have been set high due to modest improvements to refining margins of some middle distillates.
India’s fuel consumption rose in June compared with May, continuing with a gradual recovery as industrial and transport sectors reopened after a stringent lockdown, a government statement issued on Wednesday said.
In a related development, the Petroleum Products Pricing Regulatory Agency (PPPRA) has announced a new price band of N140.80 to N143.80 per litre for Premium Motor Spirit (petrol). According to the agency, the recommended petrol retail band for a litre of petrol is now between N140.80 and N143.80.
This follows an increase in crude oil prices on the back of energy report, which showed that crude inventories plunged more than expected.
Yesterday, Brent crude gained 1.1 per cent, to trade at $41.73 a barrel while U.S. crude was up 1.27 per cent, to trade at $39.77 a barrel. U.S crude inventories plunged by 8.2 million barrels to 537 million barrels, against experts’ forecasts for a draw of 710,000 barrels.
According to Stephen Innes, Chief Global Market Strategist at AxiCorp ,“Oil prices jumped after settling -1.08 % when the American Petroleum Institute (API) survey estimated a significant draw in crude oil inventories of 8.156 million barrels for the week ending June 26, which was much higher than analysts guesses.
However, bullish appetites could be tempered somewhat as distillate inventories were up by 2.638-million barrels for the week, compared to last week’s 2.605-million-barrel draw. And in contrast to the headline number, Cushing inventories reported a small build of 164,000 barrels.” Innes continued by giving a detailed analysis of what seems to be an evaporated oil output glut market, even with concerns about COVID-19 arising.
The PPPRA, in a circular dated July 1, 2020 to marketers signed by Abdulkadir Saidu, PPPRA executive secretary, said “please recall the provision for the establishment of a monthly price band within which petroleum marketers are expected to sell PMS at the retail stations, based on the existing price regime. “After a review of the prevailing market fundamentals in the month of June and considering marketers’ realistic operating costs, as much as practicable, we wish to advise a new PMS pump price band of N140.80 – N143.80/litre for the month of July 2020.” Saidu said the new ex-depot price includes the statutory charges of bridging fund, marine transport average, national transport allowance (NTA) and the administrative charge. He also advised all petroleum marketers to operate with the price band advised by the agency.
The federal government, in March, announced that the retail price of petrol would be adjusted monthly to reflect realities in the global crude oil market. The pump price was fixed at N125 per litre in March and was reviewed downwards in April to N123.50. In May, only the ex-depot price was reviewed downwards to N108 and the retail price was adjusted to N121.50 in June.