A Review of the Nigerian Energy Industry

Brent holds on Obama warning

US president Barack Obama at EU summit27 March 2014, News Wires – Brent crude held steady around $107 per barrel on Thursday as investors took stock of comments by US President Barack Obama hinting at tougher economic sanctions against Russia, including in the energy sector.

The US and the European Union agreed on Wednesday to work together to prepare possible further economic sanctions in response to Russia’s actions in Ukraine and to make Europe less dependent on Russian gas.

Obama warned at a news conference “the isolation will deepen, sanctions will increase” for Russia, the world’s biggest oil producer, if Moscow continues its current course.

Brent for May delivery was down $0.08 at $106.95 per barrel on Thursday morninh, after settling $0.04 higher.

“Brent didn’t react much last night despite Obama beating his chest over Crimea. But this is something investors continue to monitor very, very closely,” OptionsXpress market analyst Ben Le Brun told Reuters.

“I think until the situation is resolved, there will still be a risk premium in oil prices,” he said.

US crude for May delivery traded $0.10 higher at $100.36 per barrel, following a $1.07 rise in the previous session.

The contract was supported by a 1.33 million barrel fall in oil stocks at the Cushing, Oklahoma storage hub, the delivery point for US crude futures.

Stocks there have fallen due to the January start-up of TransCanada’s 700,000-barrel per day Gulf Coast pipeline. But a surge in crude stocks in the US Gulf Coast to a record high suggests the supply from Cushing is not being absorbed by the country’s largest refinery hub.

Crude oil inventories nationwide rose 6.6 million barrels, much higher than analysts’ expectations for a 2.7-million-barrel build, with most of the build on the Gulf Coast.

Following Tuesday’s positive US consumer confidence data, investors will watch in wait for final fourth quarter GDP numbers and weekly jobless claims later in the day for further signs of economic growth in the world’s biggest oil consumer.

“We expect to see more encouraging signs in the US economy, and all things being equal, data should continue to support oil markets,” Le Brun reportedly said.

Iran’s oil exports have stayed above levels allowed under Western sanctions for a fifth month, according to sources who track tanker movements.

Under a deal agreed last year to ease some restrictions on Tehran, Iran’s exports are supposed to be held at an average 1 million bpd for the six months to 20 July.

But shipments to Asia have topped that level at least since November, with March exports averaging 1.3 million bpd.

Oil theft looks set to push Nigeria off its spot as top African crude oil exporter in May and exports could fall to their lowest since records began in 2009.

A preliminary loading programme, that excluded the Forcados and Ebok crude grades, showed Nigerian exports at around 1.59 million bpd in May, far below the highs above 2.2 million bpd reached in 2011.

Angolan exports in May were set to be 1.67 million bpd, a provisional shipping list indicated.

Royal Dutch Shell declared force majeure on Nigeria’s Forcados crude exports on Tuesday due to a pipeline leak caused by oil theft.

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