Crude oil prices drifted lower at the last trading session for the week. The drop is coming amidst a spike in COVID-19 cases across emerged markets which continues to weigh down on oil traders, as it is believed that the virus has curbed demand in two of the world’s biggest crude oil consuming areas.

OPEC+ plans to reduce its current supply cuts of 7.7 million barrels per day (bpd) by 2 million bpd in January, as OPEC Secretary-General Mohammed Barkindo admits that fuel demand is looking “anemic.”

Brent crude futures (LCOc1) lost about 0.9%, to trade at $42.73 a barrel at the time this report was drafted, while U.S. West Texas Intermediate (WTI) crude futures lost 0.9%, to trade at $40.58 a barrel.

However, with their prevailing price levels, both major crude oil benchmarks are heading for small gains this week.

A technical committee of the OPEC+ ended a meeting yesterday expressing their fears over rising oil supply, as reduced human mobility aimed at limiting the spread of COVID-19 has also curbed fuel usage.

What they are saying

Stephen Innes, Chief Global Market Strategist at Axi, in an explanatory note to our source, gave his outlook for the fragile oil market.

“There is a high probability of a supportive decision from the OPEC+ meeting at the end of November if the demand outlook remains cloudy, especially with COVID-19 spreading rampantly across Europe and with flashpoints igniting in other parts of the world.

“With COVID-19 fears ravishing the world, I am unsure if an OPEC extension of current quotas will still be considered the magic bullet for the oil price recovery.

“That said, a recovery in risk markets like stocks on ongoing stimulus deal might also echo in oil markets.”

Deregulation of the downstream sector of the oil and gas industry in Nigeria has been recommended to increase investment in the refining business and facilitate exponential growth in the nation’s refining capacity.

Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari, disclosed this at the African Refiners Association Week 2020 which held virtually on Tuesday.

NNPC’s spokesperson, Kennie Onateru, said in a statement that Kyari also called for deeper collaboration among downstream players across the African continent to provide solutions to challenges of substandard fuels.

Kyari said though the idea of price stabilisation which led to the introduction of fuel subsidy in the 1970s was noble, it had grown into a huge financial burden on the nation’s treasury over the years.

He said this necessitated its removal in March.

Kyari said the move would not only free up much-needed cash to fund infrastructural development, but would also eliminate market distortion, foster competition between operators and get more private sector players to build refineries across the country.

He was quoted as saying, “It is important to note at this point that the future of our continent does not just lie in our ability to unlock value from our vast natural resources or powering an industrial and economic revolution, but also in our ability to implement proven refining solutions that consider the broader public health implications of our business decisions.”

He said the NNPC was making concerted efforts to carry out holistic rehabilitation of its refineries in Port Harcourt, Warri and Kaduna.

On his part, the Executive Secretary of ARA, Anibor Kragha, commended the NNPC for its efforts to bolster the continents’ refining capacity.

He said the association along with other stakeholders would support the corporation to achieve its objectives.

On Sunday, Nigerian oil marketers said the pump price of petrol may reduce marginally this month, going by the fall in global crude oil prices, Themoneymetrics reports.

According to them, since the cost of petrol has been largely determined by the price of crude oil, the recent marginal plunge in crude oil cost could lead to a drop in petrol price in Nigeria.

Findings by our correspondent on Sunday showed that Brent, the global benchmark against which Nigeria’s crude is priced, dropped in price by $1.66 or 4.06 per cent as at 13.20pm Central Standard Time.

The commodity (Brent) traded at $39.27 per barrel at the same time, while the cost of crude in the OPEC Basket was put at $39.94 per barrel.

Crude oil in OPEC basket dipped by $1.77 when compared with what it traded on the preceding day.

Speaking to our correspondent in Abuja on Sunday night, the National President, Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, said the prediction of marketers was that petrol price could dip in October.

He, however, said that oil marketers, particularly members of PETROAN, would continue to call for an enlarged stakeholders meeting in determining the price of petrol across the country.

Gillis-Harry said, “We will continue to insist that the arm-chair pattern of fixing prices is not correct. You saw the confusion it caused the last time. We are going to have a meeting with them (government) that will involve all the stakeholders.

“So, hopefully by then we should be able to have proper information to give to you on the latest in price.

“However, based on the slide in crude oil prices, there is the suspicion that petrol price may come down.”

The Petroleum Products Pricing Regulatory Agency commenced the deregulation of the downstream oil sector in March.

Although it provided petrol price bands in some months after March 2020, the PPPRA eventually stopped issuing price bands, as it explained that the downstream sector had been fully deregulated.