Oil Market: Price of Nigeria’s Bonny Light hovers at $71.73 per barrel


…As OPEC puts nation’s output at 1.344 mb/d

By Udeme Akpan

THE price of Bonny Light, Nigeria’s oil grade, Thursday, hovered at $71.73 per barrel, as the Organisation of Petroleum Exporting Countries, OPEC, puts nation’s output at 1.344 million barrels per day, mb/d.

This showed an excess of $31.73 per barrel, as the N7.89 trillion 2021 budget was based on $40 per barrel and 1.86 mb/d, including Condensate.

However, in its Monthly Oil Report (June), released, yesterday, OPEC, disclosed that Nigeria produced 1.344 mb/d, excluding Condensate, based on information obtained from direct sources.

Nevertheless, the organization said that the nation produced 3.88 mb/d, excluding Condensate, when information obtained from secondary sources are considered.

According to the Department of Petroleum Resources, DPR, Nigeria has the capacity to produce 300,000 – 400,000 bp/d, which attract the same price as Bonny Light in the global market.

In any case, commenting on global demand, OPEC stated in its latest report that, “Total global oil demand is expected to average 90.6 mb/d. For 2021, world oil demand growth is kept unchanged at 6.0 mb/d, with total oil demand standing at 96.58 mb/d. OECD demand is revised slightly lower on an annualized basis, mainly reflecting lower-than-expected data from OECD Americas and Europe in 1Q21.

“However, initial data for April in both regions, as well as positive mobility developments given easing restriction measures and border openings, encouraged an upward revision to 2Q21 data. This offset most of the 1Q21 downward revision. In the non-OECD, oil demand was revised slightly higher, mainly due to positive 2Q21 data from the Middle East.”

In terms of supply, the report, stated: “For 2021, non-OPEC liquids supply is revised up by 0.1 mb/d from last month’s assessment, and is now forecast to grow by 0.8 mb/d to average 63.7 mb/d. This is mainly due to a faster-than-expected recovery in US liquids production of 2.5 mb/d in March. Additionally, the supply forecast for Norway, China, and Indonesia is also revised up, while the supply forecast in the UK, Brazil, and Colombia is revised down. The main drivers for 2021 supply growth are anticipated to be Canada, Brazil, China, and Norway, while US liquids supply is now expected to only grow by a marginal 0.03 mb/d y-o-y. US crude oil is actually forecast to decline y-o-y by 0.1 mb/d to 11.2 mb/d.”

In a recent interview with Vanguard, the Ghana National Petroleum Corporation (GNPC) Professorial Chair,  Oil and Gas Economics, and Management, Institute for Oil and Gas Studies, University of Cape Coast. Ghana, Prof. Omowumi Iledare, had said: “The government is commended for the conservative choice of the assumed oil price in the budget estimate. The current price projections, according to Energy Information Administration, EIA, and even OPEC, remain more likely than not to stay within 50 – 60 in a sustainable way, other things being equal. That will certainly provide the buffer if the projected output of 1.86 fails to hold.”

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