Oil
Crude futures settle higher as US oil stockpiles drop
WASHINGTON D.C – Oil futures rose Wednesday after a government report showed U.S. oil stockpiles pulled back from an 82-year high last week, as imports fell and refineries ramped up operations.
Light, sweet crude for July delivery settled 43 cents, or 0.5%, higher at $93.74 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange fell 20 cents, or 0.2%, to settle at $103.04 a barrel.
About 6.3 million barrels were drawn from crude-oil stockpiles last week, the Energy Information Administration reported, outpacing the 400,000-barrel decline projected by analysts in a Dow Jones Newswires survey. It was the biggest drop in stockpiles this year.
“The market did not expect such a large crude draw,” said Tony Headrick, energy market analyst at CHS Hedging. “But the market did not shoot higher because supplies are [still] ample.”
Oil stockpiles had been steadily rising, reaching their highest level since May 1931 in the prior week. Last week’s pick-up in demand from refineries and a 7% drop in crude-oil imports helped reverse the trend.
In a sign of the shifting U.S. oil landscape, the volume of crude oil produced in the U.S. last week outpaced oil imports for the first time since January 1997. Domestic production surged to 7.3 million barrels a day in the week ended May 31, helped by surging flows from shale fields, while oil imports were at their lowest since September 2008.
Rising domestic production is helping to cushion the market against higher prices. Nymex crude, the U.S. benchmark, is little changed since the start of the year, while Brent crude is down about 7%.
Oil stockpiles now stand at 391.3 million barrels, 1.7% above last year’s level. “Crude-oil inventories are still exorbitantly high and it’s a big cost of capital having all that crude just sitting there,” said Kyle Cooper, managing partner at IAF Advisors in Houston.
Refineries are processing more crude now that the summer driving season is under way. Refineries used 88.4% of their total capacity last week, the EIA reported, up two percentage points from the previous week. Analysts were expecting just a half-percentage-point rise.
Gasoline stockpiles last week fell 400,000 barrels, according to the EIA. Inventories of distillates, including heating oil and diesel, rose 2.6 million barrels, as demand for those products declines with the warmer weather across the U.S.
Later this week, oil market watchers are likely to shift their attention the monthly U.S. nonfarm payrolls report for clues on the health of the job market in the world’s biggest oil consumer. Steadily high unemployment in the U.S. has kept fuel demand restrained with fewer motorists on the road.
Earlier Wednesday, payroll processor Automatic Data Processing Inc. reported private-sector employers added 135,000 jobs last month. The figure was below expectations for a gain of 170,000 private jobs, while the April employment increase was revised down to 113,000 from 119,000 reported a month ago.
Front-month July reformulated gasoline blendstock, or RBOB, settled 0.48 cent, or 0.2%, higher at $2.8230 a gallon. July heating oil settled 0.95 cent, or 0.3%, lower at $2.8554 a gallon.
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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