Market Report: Oil prices rise to three-year high

The weekly Market Report is provided by Gladius Commodities of Lagos, Nigeria. Download the full report here. Learn more about Gladius Commodities at www.gladiuscommodities.com.

Nigeria

Dr. Maikanti Baru, the Group Managing Director of the Nigerian National Petroleum
Corporation (NNPC), will join other global leaders to speak at the 27th World Gas Conference (WGC), taking place from  June 25-29, 2018 in Washington, United States.

Baru will speak on the “Role of Gas in Power Generation” highlighting the various gas-to-power initiatives of the Federal Government as championed by the NNPC. He is also expected to market Nigeria’s tremendous gas potentials as a key driver in the nation’s socio-economic development, power generation as well as industrialization. Mr. Dada Thomas, President of the Nigerian Gas Association, said with over 192 trillion cubic feet in gas reserves, Nigeria is well-positioned to ensure stable long-term infrastructure development and revenue generation. The WGC is the most important global gas industry gathering of influential leaders, policy-makers, buyers, sellers and experts on gas. This year’s event will, for the first time, include participation from professionals working in finance, trading, law, riennial event aims to raise the profile of natural gas while offering timely updates on strategic, commercial and technical issues facing the entire gas value-chain. Baru is also to speak at the 17th Nigeria Oil & Gas Conference & Exhibition (NOG) 2018 on the future growth 
plans and priorities of the NNPC. The conference is to be held on uly 2-5, 2018, at the International Conference Centre in Abuja.

The NOG 2018 which is themed ‘Driving Nigeria’s Oil & Gas Industry Towards Sustained Economic Development and Growth’ will focus attention on the growth and development of Nigeria’s hydrocarbon industry. The annual meeting of industry stakeholders will attract more than 700 industry professionals to network and explore new business opportunities within Africa’s oil and gas sector. The event will provide opportunities for Africa’s oil and gas players to network with international oil companies (IOCs) to explore possible business scopes, generate valuable new sale leads, and stay ahead of the competitors.

The Federal Government is pushing for the use of local technology for the rehabilitation of the four refineries located in Port Harcourt, Kaduna and Warri aside sourcing for third-party financiers for their revamp. The government says that IOCs that are joint venture partners with the NNPC in the production of crude oil will soon be mandated to first provide crude for local refining before shipping it out to the global oil market. Dr. Ibe Kachikwu, the Minister of State for Petroleum Resources, stated these in his latest podcast on the refineries and their production capacity which is currently at about 15 percent. Kachikwu was impressed by the model from the Ahmadu Bello University, Zaria, and stated that the Federal Government would use the technology component for the rehabilitation of the refineries. The minister added that funding from third-party investors would be used to raise the combined capacity utilisation of the refineries from 15 percent to about 90 percent. Kachikwu explained that if the country succeeded in halting the importation of refined petroleum products, it would save up to 40 percent of the total consumption of foreign exchange.

Ghana

On Thursday June 28, Tullow Oil raised its 2018 production outlook to 86,000-92,000
barrels per day (bpd) from 82,000-90,000 bpd, boosted by its offshore fields in Ghana. The Africa-focused firm said it has contracted a second rig for its Ghana fields to start work in October 2018 on three wells, without increasing its capital expenditure programme.

Tullow said it is preparing for the London Commercial Court to decide on a $277 million claim brought by Seadrill over the termination of the West Leo rig contract for force majeure in Ghana. Tullow has set aside $128 million in case it loses. Tullow is also working towards growing output in West Africa in Ivory Coast, where it has farmed out its licenses to Cairn Energy retaining 60%, but with Cairn set to pay for most of the pre-drilling exploration costs. Furthermore, Tullow is due to start exploration drilling in Namibia in September 2018 to further output growth.

Global

On Thursday  June, 28 oil prices were at a fresh three-year high amid falling U.S. stockpiles and U.S.-Iranian tensions. The US West Texas Intermediate crude for August delivery was up 1.04 percent to $73.52 a barrel at 10:15 AM ET (14:15 GMT), while Brent crude futures rose by 0.57 percent to $77.90. The U.S Energy Information Administration weekly report for Wednesday 27th June showed a fall in crude oil inventories by 9.891 million barrels in the week ending June 22, whereas market analysts’ had expected a crude-stock draw of just 2.572 million barrels.

Prices were also bolstered by tensions between Iran and the U.S. as American officials urged all countries to stop Iranian crude imports from November. An unexpected supply disruption in Canada also increased prices, after a power outage at Syncrude Canada that could leave the upgrader shut for at least a month. The cut in supply could offset production increases from the Organization of the Petroleum Exporting Countries (OPEC). OPEC agreed last week to raise output at a minimal increase of 1 million bpd amid pressure from the U.S. to decrease prices. OPEC members will add around 700,000 bpd; non-OPEC oil suppliers led by Russia would add the rest.