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Oil Futures Near One-Month Highs on Strong Product Demand

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…EIA reported stronger-than-expected demand for petroleum products

…Nymex March futures up 1.1% at $98.41/barrel

…Gasoline futures up 1.3% after smaller-than-expected supply build

NEW YORK – U.S. oil futures rose near one-month highs Thursday on positive U.S. economic data and after government data showed strong demand for petroleum products, even as overall crude-oil inventories increased.

Light, sweet crude for March delivery reached $98.83 a barrel, the highest intraday price since Jan. 2 on the New York Mercantile Exchange. The contract was recently up $1.07, or 1.1%, to $98.45 a barrel. Brent crude on the ICE Futures Europe exchange gained 77 cents, or 0.7%, to $107.02 a barrel.

The market received support from data showing improvement in the U.S. economy, said Gene McGillian, broker and analyst for Tradition Energy in Stamford, Conn. Initial claims for jobless benefits fell more than expected in the week ended Feb. 1, and the Labor Department said nonfarm labor productivity rose at a 3.2% annual rate in the fourth quarter.

Improved economic growth in the U.S. could lead to more oil demand in the world’s top oil-consuming nation.

U.S. crude-oil supplies rose by 400,000 barrels in the week ended Jan. 31, according to the U.S. Energy Information Administration. But stockpiles of distillates, including heating oil and diesel fuel, fell by 2.4 million barrels, and gasoline in storage rose by only 500,000 barrels, indicating healthy demand for petroleum products.

U.S. crude-oil prices “continue to be supported by the draws in distillate and…a very small build in gasoline” supplies, said Andy Lipow, president of Lipow Oil Associates in Houston.

Frigid weather has boosted heating-oil usage, especially in the Northeast, home to the majority of U.S. households that use the fuel. March diesel touched $3.02 a gallon in early trade. The contract was recently up 0.63 cent, or 0.2%, to $3.0031 a gallon.

The less-than-expected increase in gasoline stockpiles helped push futures higher. March reformulated gasoline blendstock, or RBOB, recently traded up 3.46 cents, or 1.3%, at $2.6759 a gallon.

Market participants “anticipated that the poor weather would impact gasoline demand more significantly than it did” last week, Mr. Lipow said.

Crude-oil supplies also fell in Cushing, Okla., where the benchmark U.S. contract is priced. Storage supplies have piled up in Cushing in recent years as U.S. oil production has increased faster than transportation capacity could be added to move the oil to refineries. A new pipeline between Cushing and Texas opened Jan. 22 and is projected to transport 520,000 barrels a day this year.

“We are viewing yesterday’s … Cushing draw as the beginning of a sustained decline that will likely be bringing similar weekly supply decreases well into the spring period,” said Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates, in a note Thursday.

– WALLSTREET JOURNAL

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Oil

FG Introduces New Incentives To Revitalize Nigeria’s Oil & Gas Industry

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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.

 

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Tinubu set to approve ExxonMobil-Seplat oil deal, expands CNG bus initiative

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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.

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Oil

ExxonMobil To Invest $10bn In Nigeria’s Deep-Water Oil Operations

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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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