By Jeph Ajobaju, Chief Copy Editor
Oil flow has resumed in the Nembe Creek Trunk Line after an explosion on February 28 ruptured one of two major lines transporting Nigeria’s high grade Bonny Light crude.
Operator of the line, Aiteo, confirmed on March 12 that operations resumed on March 7.
Reuters quoted a trading source as saying the stoppage slowed down a purchased crude cargo by just one day, as the delays were minimal.
That puts Nigeria on course to raise production from 1.78 million barrels per day (bpd) to 2.2 million (bpd) in 2019, except that it has a quota of 1.74 million bpd.
The cap is allotted by the Organisation of Petroleum Countries (OPEC) to raise prices.
Despite unease expressed by United States President Donald Trump, OPEC reduced output by 300,000 bpd in February to jerk up prices.
Trump tweeted on February 25 urging OPEC to ease its efforts to boost prices, which he said were “getting too high”.
Nigeria – the world sixth largest oil exporter – reduced output last month but currently exceeds its OPEC target of 1.74 million bpd.
Increased output may turn out to benefit the U.S. – Nigeria’s second largest oil market after India – where crude oil stockpiles declined unexpectedly last week.
Output in the U.S. slipped from record highs and refining rates edged up, while petrol stocks decreased and distillate inventories rose, the Energy Information Administration said on March 13, as reporter by Reuters.
Crude inventories fell by 3.9 million barrels in the last week, compared with analysts’ expectations for an increase of 2.7 million barrels.
The biggest decline came from the Gulf Coast, where stockpiles fell by more than 5 million barrels to 222.1 million barrels. Inventories in the East Coast and Midwest regions increased.
Crude stocks at the Cushing, Oklahoma, delivery hub fell 672,000 barrels, their first drawdown in a month, the EIA said.
Net U.S. crude imports were steady, just edging 2,000 bpd higher, while domestic crude production slipped 100,000 bpd from its record high to 12 million bpd.
Refinery crude runs rose by 30,000 bpd and utilisation rates nudged 0.1 percentage point higher to 87.6 per cent of total capacity, EIA data showed.
“This was your best chance to get an increase in supply because from this point forward, with the refiners starting to slowly come out of maintenance, with OPEC cuts starting to kick in and Venezuelan supplies, you’re probably now looking at a future with more draws in the coming weeks,” said Phil Flynn, analyst at Price Futures Group in Chicago.
OPEC and allies have agreed to cut oil output since January in an effort to reduce global supplies and raise prices.
This week, Russian news agencies reported Saudi Arabia is proposing that the deal be extended until the year-end.
U.S. sanctions on Venezuela has further tightened markets, to the advantage of other producers like Nigeria.
Venezuela’s worst blackout on record has left most of the country without power for six days. Hospitals struggle to keep equipment running, food rot in the tropical heat, and exports from the main oil terminal are shut down.
Oil prices briefly extended gains after the report before steadying. U.S. crude futures climbed to a four-month high above $58 a barrel after the data was released.
Gasoline stocks fell by 4.6 million barrels, nearly double analysts’ expectations in a Reuters poll for a 2.5 million barrels drop.
Distillate stockpiles, which include diesel and heating oil, rose by 383,000 barrels, versus expectations for a 1.9 million-barrel drop, the EIA data showed.