Oil Prices Dip On Economic Concerns, Demand Worries

Emmanuel Ibe Kachikwu, pictured on June 2, 2016, will step down as group managing director of the Nigerian National Petroleum Corporation but continue as chairman ©Joe Klamar (AFP)

Oil prices fell on Tuesday, with Brent dropping back below U.S.$50 per barrel as economic concerns took centre stage with many analysts saying crude demand will stall later this year.

AFP report continues:

International benchmark Brent crude oil futures were trading at U.S.$49.60 per barrel at 0044 GMT, down 50 cents, or 1 percent, from their last settlement. U.S. West Texas Intermediate (WTI) crude futures were down 77 cents, or 1.57 percent, at U.S.$48.22 a barrel.

Analysts said that concerns over the global economy were weighing on the outlook for oil demand and on prices.

"The deterioration in the global economic outlook, financial market uncertainty and ripple effects on key areas of oil demand growth are likely to exacerbate already-lacklustre industrial demand growth trends," British bank Barclays said in a note to clients.

A flurry of data from China in coming weeks is expected to show continued weakness in trade and investment, sluggish industrial output and another drop in foreign reserves, reinforcing views that Beijing will roll out more economic support measures soon.

JPMorgan said in its latest oil market outlook that "macro-economic risks may weigh on oil prices", although the U.S. bank added that oil prices would still likely rise between this year and the next as stocks are drawn down, and political risk and maturing oil fields tighten the market.

JPMorgan said it expected Brent and WTI to average U.S.$47.30 and U.S.$46.66 per barrel respectively this year and U.S.$56.75 a barrel for both in 2017. That's an increase of U.S.$2 each for 2016 and U.S.$1.75 a barrel for both benchmarks for 2017, compared with the bank's previous forecast.

In the latest sign of a glut in refined products, which traders say will reduce orders for crude oil, which is the most important refining feedstock, several tankers carrying gasoline-making components have dropped anchor off New York harbour, unable to discharge as onshore tanks are full.

Nigerian State-Run Oil Firm Chief Replaced: Govt

AFP reports that Nigeria's junior oil minister Emmanuel Ibe Kachikwu has been replaced as head of the country's state-run oil firm, President Muhammadu Buhari announced on Monday.

Buhari said in a statement that Kachikwu would step down as Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) but continue as chairman.

The former oil executive was effectively in charge of the day to running of the NNPC and overseeing the key sector, in an arrangement that was viewed by some in the industry as a conflict of interest.

The new group managing director will be Maikanti Kacalla Baru, a 57-year-old trained engineer who had been NNPC group executive director of exploration and production.

Buhari, who appointed himself oil minister in November last year, also named a new board of directors, including his chief of staff Abba Kyari.

Kachikwu, 59, was only given the job in August last year as part of Buhari's efforts to overhaul the NNPC and tackle rampant corruption in the sector.

The Harvard-trained lawyer ordered a forensic audit of the company's accounts and publication of its oil receipts for the first time in a move to bring greater transparency and accountability.

Top management positions were trimmed and plans announced to split up the NNPC into 30 separate companies to boost efficiency.

Buhari, who took office in May last year, has pledged to recover what he said were "mind-boggling" sums of public money stolen by corrupt officials, including those at the NNPC.

In 2014, former central bank governor Lamido Sanusi accused the company of withholding some U.S.$20 billion in oil revenue, which led to his ouster.

OPEC-member Nigeria, which relies on oil sales for some 70 percent of government revenue, has been plunged into a financial crisis because of low global oil prices.

Militants have also stepped up attacks on installations in the oil-producing southern delta region, cutting production. The NNPC is one of the companies targeted.