Brent moves up, but at a sluggish pace

The front-month ICE Brent contract has inched upwards by $0.24/bbl on the day, to $75.79/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

Nigeria has commissioned the 650,000 b/d Dangote oil refinery, which will begin operations in June. The facility is most likely to process Nigerian crude. However, in recent years, the OPEC member has struggled to meet its production targets due to various factors, including oil theft.

The possibility that Nigeria will have to reduce its crude exports to divert supply to the refinery could further exacerbate concerns about supply tightening.

Meanwhile, seaborne net exports of OPEC nations that implemented production cuts, starting in May, have declined by 1 million b/d over the past two weeks, according to SPI Asset Management’s managing partner Stephen Innes, who cited Kpler data.

Furthermore, a Kpler forecast states Russia's oil production for May will hover at 10.70 million b/d, a decrease of about 350,000 b/d from February's output.

Downward pressure:

The oil market remains cautious as the US Congress is still caught in a debt-ceiling stalemate, with the “hard-deadline” of 1 June just over 10 days away.

Concerns over the world's largest economy defaulting on its debt obligations, coupled with slower-than-expected economic recovery in China, have kept Brent under the weather this month.

“Oil prices have come under significant pressure through Q2, primarily reflecting evidence of increasing Western demand headwinds from a sharp manufacturing slowdown and collateral damage from the US banking sectors,” Stephen Innes wrote in a recent note to clients.

By Konica Bhatt

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