Nigeria’s oil export to hit four-month high as investor optimism dims

Nigeria oil export is forecast to hit a four-month high of 1.73 billion barrels per day (bpd) but investor optimism is waning about the possibility of global oil price increase.

Africa’s largest oil producing country’s export plan for October will comprise 57 cargoes which is 7 cargoes lower compared with 48 cargoes in September’s loading schedule as Agbami, Bonga, Escravos, Forcados Okono and Qua Iboe will load the highest in October.

These streams will have a combined 33 cargoes while several smaller streams like Amenam, Pennington, Okwori, okwuibome and Antan which have no export cargo in September will add at least one cargo in October while Brass River will add at least 5 cargoes.

However, the case for bullish global oil price, which was made amid trade wars between the United States of America and China, world’s two biggest economies is losing its lustre and investors are recalibrating their decisions.

“The bull case for oil and liquefied natural gas remains in place” Jeff Currie, head of commodities research at Goldman Sachs said, August 9, in an interview with CNBC.

A Bloomberg report says hedge funds’ net-bullish position on Brent crude, a measure of how positive money managers are that prices will gain, has plunged 49 percent since early April as trade wars cloud the picture for oil consumption. Despite a good week for the benchmark amid strikes at North Sea fields and declines in U.S. stockpiles, Brent remains about 6 percent down from this year’s peak in May.

“When you start to look at the different economies across the globe, Europe, Asia, the emerging markets are definitely starting to hit some headwinds,” said Mark Watkins, who helps oversee $151 billion at U.S. Bank Wealth Management in an interview with Bloomberg. Investors “are potentially getting a little bit more concerned about the rest of 2018 and probably going into 2019, that demand might be a little bit softer than previously had been.”

The exchange of tariffs between the U.S. and China is one factor that threatens to weaken global economic growth and hurt energy demand. Technical indicators also pointed to a potential decline in prices: During the period covered by the report, Brent’s 50-day moving average dropped below its 100-day one, an invitation to sell.

An additional factor dampening investor optimism is the stalled Saudi Aramco’s initial public offering (IPO). It has focused on buying a strategic stake in local petrochemical group Sabic for as much as $70 billion. While the Sabic deal will delay the IPO, it doesn’t mean it’s cancelled, people familiar with the matter said, asking not to be identified because the information is private.

“I am not a betting man, but I am fairly certain that the Aramco IPO will not happen before the end of 2019. But I’ll bet £50 that there is no domestic stock listing, and another £50 there is no international listing, before the end of 2019,” John Kemp, an international Energy analyst, tweeted despite Riyad’s statement on August 23.

Hedge funds’ net-long position, the difference between bets on higher prices and wagers on a drop in Brent was reduced to 324,431 contracts, ICE Futures Europe data show for the week ended August 21. That compares with a high for the year of 632,454 in the week ended April 10. Longs fell to the lowest in more than two years.

STEPHEN ONYEKWELU