Oil prices rallied for a third straight session on Wednesday to new 2016 highs above $50 a barrel on relentless sabotage of oil supplies in Nigeria and ahead of US crude inventory data likely to show draws.
Data from showing May crude oil imports in China at their highest in more than six years also boosted prices as it fed hopes that energy demand was stabilizing in the number two economy and also the world’s second-largest oil consumer.
The dollar’s drop to five-week lows on waning expectations for an imminent US rate hike also added to interest in greenback-denominated oil from holders of the euro and other currencies.
Brent crude futures rose $1 to $52.44 a barrel by 9:45am EDT, after reaching $52.47, their highest level since October.
US crude’s West Texas Intermediate futures were up 88 cents at $51.24 a barrel, after rallying to $51.27, their highest since last July.
“The trend is your friend and picking tops can be painful as all of the money out there chasing trends from the systematic side of the market can overwhelm,” said Scott Shelton, broker at ICAP in Durham, North Carolina.
“That seems to be happening here and being driven by Nigeria outages and trade buying as they pull barrels from inventory.”
The Niger Delta Avengers militant group in Nigeria, which has brought oil output in Africa’s largest producer to a 20-year low, said it had blown up a Chevron oil well as it rejected peace talks with the government.
The rebel assault came ahead of weekly crude inventory data from the US government, likely to show draws.
Analysts polled by Reuters have forecast a decline of 2.7 million barrels in US crude last week while trade group American Petroleum Institute has indicated the drop could be as large as 3.6 million barrels.
Meanwhile, the revenue of Nigerian National Petroleum Corporation (NNPC) dipped in April by 4.99 per cent to N102.45 billion from N107. 83 billion recorded in March, the agency said in a report.
The Monthly Financial and Operations Report for April was released in Abuja on Wednesday.
It states that the corporation’s expenses also dipped by 3.82 per cent to N121.88 billion compared to N126.72 billion spent in the preceding month.
It attributed the drop to pipeline vandalism which forced one of its subsidiaries, Nigerian Petroleum Development Company (NPDC), to undertake a production shut-in, which resulted in the loss of monthly crude oil revenue of N20 billion.
The report said “NPDC deficit and low revenue in the month of February to March 2016 and April 2016 was due to production shut–in, resulting to loss of entire NPDC’s revenue from crude oil sales of about N20 billion occasioned by vandalism of Forcados Export Line.”
It further blamed the poor performance on losses recorded in the operations of Pipelines and Products Marketing Company (PPMC) from the fuel scarcity recorded during the period.
It said PPMC, being the sole supplier of last resort, in its drive to bridge the petroleum products supply gap, suffered losses.
It said shortage of products compelled PPMC to sometime engage in commercially unfavourable short term arrangements.
Another major contributor to the loss was high operation costs in the Corporate Headquarters, which included expenses related to the on-going restructuring programme at NNPC, the report said.
A breakdown of the financial performance shows that in spite the shut-in, NPDC recorded a profit of N2.25 billion but Integrated Data Services Limited posted a loss of N476.06 million.
“National Engineering Technical Company Limited recorded a deficit of N167.41 million and the Nigerian Gas Company posted a profit of N4.54 billion.
“The NNPC Retail and the PPMC posted profit of N718.15 million and a loss of N6.905 million respectively,” the report states.
It said that all the three refineries recorded poor financial performances.
It noted that the Kaduna, Port-Harcourt and the Warri Refining and Petrochemical Companies posted losses of N2.28 billion, N1.81 billion and N971.04 million respectively.
It further said that the Corporate Headquarters recorded a deficit of N13.047 billion, while Corporate Service Units posted a loss of N1.28 billion. – Upstream, The News.
