How Avengers’ suspension of hostility triggered gains in oil market  

The international oil market witnessed a slight price increase of 1.3 per cent Monday at the news that the militant group Niger Delta Avengers (NDA) announced an end of hostilities in the oil reach Niger Delta region.

The announcement also led to two consecutive days of gains on the exchange rate of the naira to the dollar, which picked up from N385 to N383 between Monday and Tuesday.

A renewed hope was also expressed on the possibility of Nigeria recouping the 700,000 barrels of crude oil-loss per day, for it to return to its projected daily production of 2.2 million bpd, as reflected in the 2016 budget.

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But it was not clear, at the time of going to press, if the counter threat attributed to President Muhammadu Buhari that his administration would treat Niger Delta militants the same way as Boko Haram insurgents, would rubbish the olive branch waved by the militants.

However, the gains may not be long as the United States is said to have increased its crude oil stockpiles, the second time in three months, straight from last week, which now stands at 1.35 million barrels reserve per day from its usual one million bpd.

All of these came on top of Iraq’s pledge, at the weekend, to increase its crude oil shipping by about 30 per cent to the Asian markets, where Nigeria and other OPEC-member countries are currently targeting.

Sources said the fear of a renewed glut starting off immediately all oil producing countries resume their quotas, suspended in the past months as a result of the fall in price of crude, is still being entertained.

Already, news that oil and gas operators in the U.S. Gulf of Mexico have shut production to about 168,334 barrels per day of oil and 190 million cubic feet per day of natural gas, has reportedly sent some precautionary measures to the market.

 

 

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