… As Nigeria commit to agreed OPEC production adjustments
Oil prices fell more than 1% on Thursday, extending the previous session’s 3% drop, pressured by mounting recession concerns and a surprise boost in U.S. crude inventories.
In a sign of investor concern that the world’s biggest economy could be heading for recession, weighing on oil demand, the U.S. Treasury bond yield curve inverted on Wednesday for the first time since 2007.
China’s threat to impose counter-measures in retaliation for the latest U.S. tariffs on $300 billion of Chinese goods also weighed on oil prices.
Brent crude fell as much as 3%, to $57.67 a barrel. The international benchmark was 2.35% lower at $58.08 and West Texas Intermediate crude (WTI) was down 1.76%, to $54.26.
“Oil is getting whacked again as risk-aversion again kicks in and fears of a trade war inflicted slowdown grip traders,” said Craig Erlam, senior market analyst at OANDA.
“WTI had enjoyed a decent rebound over the last week but failed at the first hurdle, running into resistance around the mid-July lows before plunging once again.”
The price of Brent is still up 10% this year thanks to supply cuts led by the Organization of the Petroleum Exporting Countries and allies such as Russia, a group known as OPEC+.
In July, OPEC+ agreed to extend oil output cuts until March 2020 to prop up prices. A Saudi official on Aug. 8 indicated more steps may be coming, saying “Saudi Arabia is committed to do whatever it takes to keep the market balanced next year.”
But the efforts of OPEC+ have been outweighed by worries about the global economy amid the U.S.-China trade dispute and uncertainty over Brexit, as well as rising U.S. stockpiles of crude and higher output of U.S. shale oil.
“The market is becoming very anxious about global growth,” said Tamas Varga of oil broker PVM. China reported disappointing data for July, including a surprise drop in industrial output growth to a more than 17-year low. A slump in exports sent Germany’s economy into reverse in the second quarter.
Meanwhile, a second week of unexpected rises in U.S. crude inventories is adding to the pressure.U.S. crude stocks grew by 1.6 million barrels last week, compared with expectations for a drop of 2.8 million barrels, the Energy Information Administration (EIA) said.
Providing some support to U.S. crude prices, inventories at Cushing, Oklahoma, the delivery point for WTI, fell by about 2 million barrels in the week to Aug. 13, traders said, citing data from market intelligence firm Genscape.
Meanwhile, Nigeria has reaffirmed its unwavering commitment to production adjustments agreed upon under the Declaration of Cooperation (DoC) between member countries of the Organization of the Petroleum Exporting Countries (OPEC) and Non-OPEC Countries at the last Ministerial Meeting of what is known as OPEC Plus, held in Vienna, Austria.
Nigeria’s Representatives on the OPEC Economic Commission Board and Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, made this known in a statement made available to Daily Champion According to the statement signed by the OPEC Representative, Nigeria is totally committed to full compliance with the agreement reached by the parties to the DoC.
“Right now we are not only committed to the agreement but we have elevated our attitude towards it to the point of complete devotion to the adjustments and we urge other parties to follow suit,” the OPEC Rep stated.
Kyari expressed strong optimism that the momentary and artificially induced bearish trends would naturally correct itself based on the strong market fundamentals which have remained steadfast despite the price slid.
He enthused that with a visible steady decline in commercial stock overhang propelled by healthy demand, it is only logical for all advocates of oil price stability like the OPEC Plus allies to comply strictly with the agreed production adjustments.
He concluded that with the increasing volatility of the oil market, it has become commonsensical for Nigeria and all other parties to the agreement to entrench an attitude of unwavering devotion to the deal anchored on full and timely conformity to their obligations.
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