Oil prices last Friday, fell for the fifth straight day, dipping below $79 a barrel as the American currency strengthened and forecasters saw milder winter weather ahead.
The Tide reports that benchmark crude for February delivery slid 57 cents to $78.82 a barrel on the New York Mercantile Exchange.
The weather outlook for the next 10 days calls for above average temperatures across nearly all regions of the US, while virtually all parts of Europe is experiencing freezing temperatures, which should temper demand for heating oil.
With Nigeria now exporting between 2million and 2.4million barrels of crude oil per day, it follows that the country makes approximately $158million and $189.6million, which translates to about N20.224billion and N24.268billion daily on crude oil sales at the international market.
The Tide notes that crude prices have been on the rise since early December following unprecedented cold temperatures across Europe and North America, with heavy snow enveloping streets, roads and homes, and disrupting economic and social activities.
Prices also fell on concerns about weak consumer demand as the US Labour Department reported that inflation-adjusted wages fell 1.6 per cent last year, the sharpest drop since 1990 and well below the 2.7 per cent inflation rate for the year.
That came on the heels of data released last Thursday showing a drop in retail sales in December.
In other Nymex trading in February contracts, heating oil fell 2.06 cents to $2.0623 a gallon and gasoline slid 1.52 cents to $2.0582 a gallon.
Meanwhile, natural gas futures gained 7.5 cents to $5.663 per 1,000 cubic feet.
Nelson Chukwudi, with agency reports
US Plans To Reduce Gasoline Prices
The Biden Administration is considering tapping the Strategic Petroleum Reserve as a potential tool to bring down the gasoline prices
Selling millions of barrels from the SPR may do precious little to impact the price of gasoline directly
·If the Administration were to opt for an SPR sale to increase the availability of crude, it could likely release up to 60 million barrels of crude oil
·The Biden Administration is considering tapping the Strategic Petroleum Reserve as a potential tool to bring down the gasoline prices in America that have hit a seven-year high this year.
However, selling millions of barrels from the SPR may do precious little to impact the price of gasoline directly, traders and analysts say.
A sale from the SPR could be one of “tools in the arsenal”—as U.S. President Joe Biden said this weekend – which the Administration could use to relieve the burden on households who have been paying in recent months the highest prices at the pump since 2014.
Yet, the U.S. may be able to release up to a tenth of the current stockpile in the SPR, traders have told Bloomberg. That wouldn’t be enough to bring down gasoline prices as much as the Administration possibly hopes, they warn.
Moreover, most of a potential sale could consist of sour crude grades, which currently are not the favorite of refiners because they need more natural gas—whose prices are much higher now—to process those sour grades into fuels.
SPR Release On The Table After OPEC+ Snub
“The SPR is certainly on the table as an option. The president will have more to say about that,” U.S. Energy Secretary Jennifer Granholm said on Friday when asked what America can do now to reduce gasoline prices.
President Biden is considering a release from the SPR as a possible move to reduce gasoline prices in the United States, after OPEC+ ignored on Thursday calls for putting extra barrels on the market, Secretary Granholm told Bloomberg last Friday.
The President could announce measures to address high gasoline prices as soon as this week, Granholm told MSNBC in an interview on Monday.
“Hopefully there will be an announcement or so this week,” Granholm told MSNBC, referring to the President’s possible moves.
“He’s certainly looking at what options he has in the limited range of tools a president might have to address the cost of gasoline at the pump, because it is a global market,” the energy secretary added.
Gasoline Prices Highest Since September 2014
Meanwhile, U.S. gasoline prices continued to climb despite the end of driving season two months ago.
In the week to November 8, “The price at the pump continued its slow climb, rising two cents on the week, with the national average for a gallon of gas hitting $3.42,” AAA said on Monday. That’s the highest since September 2014.
“The latest decision by OPEC and its oil-producing allies to maintain their planned gradual increase in output will not help lessen supply constraints, so any relief will most likely have to come from the demand side,” according to AAA.
Shorter days with the end of the daylight saving time could decrease demand for gasoline in coming weeks, AAA spokesperson Andrew Gross said.
SPR Sale Will Likely Be Up To Three Days Of U.S. Petroleum Consumption
If the Administration were to opt for an SPR sale to increase the availability of crude, it could likely release up to 60 million barrels of crude oil, after accounting for mandatory sales pre-approved by Congress and the minimum volumes needed at the storage sites, a source at one of the world’s top oil trading houses told Bloomberg on condition of anonymity.
As of November 5, the SPR held 609.4 million barrels of crude oil, of which 252.5 million sweet crude and 356.9 million sour crude.
A release of up to 60 million barrels in theory would cover around three days worth of total U.S. petroleum consumption, which was 20.5 million barrels per day (bpd) in the pre-pandemic 2019, per EIA data.
According to analysts, an SPR sale wouldn’t do much to reduce prices at the pump and relieve the burden on households amid inflationary pressure for all other goods.
“Other Tools In The Arsenal”
President Biden hinted during the weekend of “other tools in the arsenal” to tame rallying gasoline prices.
“There are other tools in the arsenal that we have to deal — and I’m dealing with other countries; at an appropriate time, I will talk about it — that we can get more energy in the — in the pipeline, figuratively and literally speaking,” President Biden said, referring to the oil market after OPEC+ snubbed the U.S. Administration’s call for extra supply.
On Monday, eleven Democratic Senators wrote a letter to President Biden “to express our support for your efforts to help families and businesses across the nation who are struggling to cope with soaring gasoline prices.”
“Continued U.S. exports and overseas supply collusion could be devastating to many in our states, contributing to higher bills for American families and businesses,” the Senators, including Elizabeth Warren, said.
“In light of these pressing concerns, we ask that you consider all tools available at your disposal to lower U.S. gasoline prices. This includes a release from the Strategic Petroleum Reserve and a ban on crude oil exports. We hope you will consider these tools and others to make gasoline more affordable for all Americans,” the Senators wrote.
Faced with the highest gasoline prices in seven years and one of the worst fears of every American president—high prices at the pump, the U.S. Administration with the long-term clean energy agenda is now scrambling to provide immediate relief to people’s gasoline and energy bills.
FG Increases Prices Of Electricity Meters
The Federal Government has raised the cost of both single-phase and three-phase electricity meters.
In a circular dated November 11, 2021, issued by the Nigerian Electricity Regulatory Commission, NERC, price of a single-phase meter has been increased from the current cost of N44,896.17 to a revised price of N58,661.69.
It also increased the price of a three-phase meter from the current cost of N82,855.19 to a revised rate of N109,684.36.
The memo with reference number NERC/REG/MAP/GEN/751/2, entitled ‘Review of the unit price of end-use meters under the Meter Asset Provider and National Mass Metering Regulations’; managing directors, all electricity distribution companies and all meter asset providers are to effect the increment from November 15, 2021.
Seplat Energy Distances Self From Chairman
Seplat Energy Plc has said that an ex parte order granted by the Federal High Court in Lagos has barred it from doing business with its Chairman, Dr. ABC Orjiako, and two energy firms.
A statement from the company on Tuesday, signed by its Director, Legal and Company Secretary, Mrs. Edith Onwuchekwa, said: “Seplat Energy has been made aware of the ex parte Interim Orders of Mareva Injunctions which were granted by the Federal High Court sitting in Lagos, Nigeria in a court action instituted by Zenith Bank Plc against Shebah Exploration & Production Company Limited and eight others, with an additional 29 cited parties.
“The Interim Orders give an administrative mandate to Seplat Energy Plc and others not to deal with the assets of (or transfer funds to) Shebah Exploration & Production Company Limited, Shebah Petroleum Development Company Limited and Dr. A.B.C. Orjiako.
“The order has no impact on the operations of Seplat Energy. We understand the injunction relates to loans made by Zenith Bank Plc to Shebah Exploration & Production Company Limited in 2014.”
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