A Review of the Nigerian Energy Industry

Brent edges up

Brent crude oil02 January 2014, News Wires – Brent crude edged up to $111 per barrel on Thursday on a drop in US inventories and output cuts in Libya and South Sudan, but a weaker Chinese economy may hold back further gains.

Factory growth in China – the second largest oil consumer – slowed in late 2013, although the purchasing managers’ indexes published by the government and HSBC remained above 50 for December, indicating business activity is still expanding.

China’s factory activity expanded at the slowest pace in three months in December, according to the HSBC survey, consistent with views the economy’s growth rate has moderated.

“The Chinese PMI data were not exactly bullish,” IHS oil consultant Victor Shum told Reuters. “The only thing supporting oil prices is probably the US inventories.”

February Brent crude edged up 20 cents from Tuesday to $111 per barrel by Thursday morning.

US crude for February delivery was at $98.64, up 22 cents.

Markets were shut on Wednesday for the New Year.

Data from the American Petroleum Institute showed on Tuesday a drop of 5.7 million barrels in US crude stockpiles, nearly double the 3-million-barrel draw expected by analysts surveyed by Reuters.

The US Energy Information Administration will release its data on 3 January due to the holiday.

Lower US inventories helped buoy the West Texas Intermediate oil price in 2013.

The average for the past year was $98.05 per barrel, up 4.2% from $94.14 in 2012.

The average Brent price for 2013 was $108.70 in 2013, down 2.7% from $111.68 in 2012 in a well-supplied market despite disruptions in the Middle East, Africa and North Sea.

Production in Libya, Iran, Iraq and the United States will be closely watched this year, IHS’ Shum told Reuters, in addition to any signs of further stimulus tapering by the US Federal Reserve.

In Libya, oil output is still less than 250,000 barrels per day, down from 1.4 million bpd in July, as ports in the eastern part of the country remain shut.

South Sudanese President Salva Kiir declared a state of emergency in two states on Wednesday as his negotiators prepared for peace talks with rebels to end more than two weeks of violence that has pushed the country towards civil war.

Iran and six world powers will implement an agreement in late January obliging Tehran to suspend its most sensitive nuclear work, an Iranian official was quoted as saying on Tuesday, a move that could see Iranian oil exports rising soon.

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