Oil Market: Nigeria’s Bonny Light Rebounds,Hits $74.35per Barrel

.As OPEC, IEA present positive outlooks
By Udeme Akpan, Energy Editor

THE price of Nigeria’s Bonny Light, Thursday, rose to $74.35 per barrel, from $72. 51 per barrel, Wednesday, due to positive speculation over the demand outlook in the global market.

The price of the premium oil grade that Nigeria depends on to fund its yearly budgets had dropped by as much as $7 per barrel, from over $80 per barrel in the past three days, due mainly to a negative demand outlook.

But the combined reports by the Organisation of Petroleum Exporting Countries, OPEC, and the International Energy Agency, IEC, released in the past two days painted a positive demand outlook which culminated in speculation, leading to the price recovery.

According to OPEC, the expected rise in oil demand would be driven mainly by China, stressing that, “China is revised higher, with jet/kerosene and gasoline leading demand growth. Organization for Economic Cooperation and Development, OECD demand is expected to grow by 0.2 mb/d, while non-OECD is forecast to grow by 2.1 mb/d.”
Similarly, the IEA also maintained that it expected global oil demand to hit a record high this year, at 102 million barrels daily.

However, the current price showed that Nigeria has not fully recovered as its 2023 budget was based on $75 per barrel and 1.8 million barrels per day, bpd, including condensate.

This means that the nation still needs further oil price recovery to generate adequate revenue for the implementation of the 2023 budget.

Meanwhile, OPEC stated in its March 2023 Monthly Oil Market Report, MOMR report that although Nigeria’s oil production rose month-on-month, MoM by 3.8 per cent to 1.306 million barrels per day, bpd in February 2023, from 1.258 million bpd recorded in the preceding month of January 2023, the output was still below its 1.8 million bpd OPEC quota.

However, data obtained by Vanguard from Shell Petroleum Oil Spill Data showed that oil production was still constrained by pipeline vandalism, oil theft, and illegal refining in the Niger Delta.

Also, the company also stated in its Briefing Notes that, “The SPDC JV produced 383,000 barrels of oil equivalent in 2021, compared with 497,000 barrels of oil equivalent in 2020. The fall in output was largely a result of curtailed oil production because of heightened security issues, such as crude oil theft and illegal oil refining. Production numbers were also down as a result of divestment action, including the sale of SPDC’s 30% interest in OML 17 for $533 million.”
Speaking in a telephone interview with Vanguard, Lead promoter, EnergyHub Nigeria, Prof. Felix Amieyeofori, called for increased investment into the oil and gas industry in order to boost exploration and production capacity.

He said: “The Petroleum Industry Act, PIA has since become a reality. Now, the government has to work with other stakeholders, especially private investors to increase investment. It is an increased investment that would lead to increased exploration that the nation needs to make new oil and gas finds, thus increasing reserves and production capacity. Also, we need to use our oil revenue to deepen investment in gas as part of our Energy transition.”