Oil & Energy

Standard Chartered: Oil Demand Not As Bearish As Imagined

Published

2 years ago

August 26, 2024

Oil prices have been on the backfoot in the current week, pulling back from gains in recent weeks, thanks to easing geopolitical fears and seemingly never-ending demand concerns.
On Monday, United States Secretary of State, Antony Blinken, announced that Israeli Prime Minister, Benjamin Netanyahu, had accepted a cease-fire proposal to stop the war in Gaza, but on Thursday, sources close to the White House reported that such a deal is once again out of reach as Hamas is unlikely to accept the Israeli terms, which include the occupation of the Philadelphi corridor, which Israel claims has given Hamas a strategic lifeline.
Crude oil futures fell significantly on Wednesday, with WTI crude falling to $72 per barrel and Brent crude falling briefly into the $75 dollar handle. Prospects of weak demand in China offset any gains from risks to supply, with government data showing that crude demand in the country fell 8per cent Y/Y in July.
Commodity analysts at Standard Chartered have been able to gauge crude demand on a global scale following the release of Joint Oil Data Initiative (JODI) data on 19 August.
According to StanChart, global oil demand in June clocked in at a healthy 103.01 million barrels per day (mb/d), an all-time high.
Following JODI revisions, StanChart estimates that May demand came in at 102.68 mb/d, the second-highest monthly average after June. The average demand growth for the second quarter was 1.521 mb/d y/y, close to StanChart’s forecast for 2024 full-year growth (1.514 mb/d).
The only bearish data point in that report is that demand growth has been slowing, with June demand growth clocking in at 788 thousand barrels per day (kb/d), a deceleration from 1.267 mb/d in May and 2.129 mb/d in April. StanChart has predicted that global demand will remain above 103 mb/d for the rest of 2024, before falling to 101.9 mb/d in January due to seasonality.
Meanwhile, global crude supply growth remains muted, with June supply increasing by 160 kb/d m/m to 102.097 mb/d, well below December 2023’s all-time high of 103.162 mb/d.
Constrained global supply growth can largely be chalked up to weak non-OPEC growth, particularly by the U.S. Oil production in the United States is set to grow just 2.3per cent in the current year as shale producers stick to production discipline and goal to return capital to shareholders.
Crude exports from U.S. ports have averaged 4.2 million barrels per day so far this year, up a mere 3.5per centY/Y compared to a robust 13.5per cent growth in 2023. This year’s growth clip is the lowest since 2015, when the country lifted a 40-year federal ban on the export of domestic crude.
U.S. shale producers are simply not willing to drill more. High decline rates for shale wells usually sets in soon after commissioning, meaning extra well completions are required to offset declines from existing wells if output is to be maintained.
Earlier in the year, StanChart reported that the horizontal rig count started to decline sharply in early 2023 and is currently 20per cent below its post-pandemic peak after flatlining for the past six months.
The analysts point out that whereas the completion of previously drilled wells and technical change provide an offset, a significant fall in activity, more often than not, leads to a lagged decline in growth.
The big rally in Europe’s natural gas prices that kicked off in July appears to have run out of steam thanks to high inventory levels and easing supply jitters. Dutch front-month futures, Europe’s gas benchmark, were quoted at €37.22 per megawatt-hour on Monday at 1315 hrs ET, largely unchanged over the past 10 days but considerably higher than the price a month ago at €30.10 per megawatt-hour. The gas price rally in the United States has been more subdued, with Henry Hub prices trading at $2.15/MMBtu from $2.01/MMBtu a month ago.
According to the latest Gas Infrastructure Europe (GIE) data, EU gas inventories are on the verge of moving above the EU Commission’s 90% of capacity target 10 weeks earlier than the 1 November deadline.
Gas inventories stood at 104.23 billion cubic meters (bcm) on 18 August; good for a fill rate of 89.8per cent. German storage is already at 93.3per cent of capacity, well ahead of the country’s 1 September target of 65per cent.
Last month, the U.S. Energy Information Administration predicted that U.S. natural gas prices will rally strongly in the second half of the current year thanks to production cuts.
According to the EIA, the Henry Hub natural gas spot price will average almost $2.90 per million British thermal units (MMBtu) in 2H24, up from $2.10/MMBtu in 1H24, good for a nearly 40 per cent increase.
Kimani writes for Oilprice.com.

By: Alex Kimani

Oil & Energy

NERC, OYSERC Partner To Strengthen Regulation

Published

3 days ago

February 23, 2026

The Tide

THE Nigerian Electricity Regulatory Commission (NERC) has stressed the need for strict adherence to due process in operationalizing state electricity regulatory bodies.

It, however, pledged institutional and technical support to the Oyo State Electricity Regulatory Commission (OYSERC).

The Chairman, NERC, Dr Musiliu Oseni, who made the position known while receiving the OYSERC delegation, emphasised that the establishment and take-off of state commissions must align fully with the law setting them up.

Oseni said that the NERC remains committed to partnering with State Electricity Regulatory Commissions (SERC) to guarantee their institutional stability, operational effectiveness and long-term success.

He insisted that regulatory coordination between federal and state institutions is critical in the evolving electricity market framework, noting that collaboration would help to build strong institutions capable of delivering sustainable outcomes for the sector.

Also speaking, the Acting Chairman, OYSERC and leader of the delegation, Prof. Dahud Kehinde Shangodoyin, said that the visit was aimed at formally introducing the commission’s acting leadership to the NERC and laying the groundwork for a productive working relationship.

Shangodoyin said , the acting members were appointed to provide direction and lay a solid foundation for the commission during its transitional period, pending the appointment of substantive members.

“We are here to formally introduce the acting leadership of OYSERC and to establish a working relationship with NERC as we commence our regulatory responsibilities,” he said.

He acknowledged NERC’s readiness to provide technical and regulatory support, particularly in the area of capacity development, describing the backing as essential for strengthening the commission’s operations at this formative stage.

“We appreciate NERC’s willingness to support us technically and regulatorily, especially in building our capacity during this transition,” he added.

Oil & Energy

NLC Faults FG’s 3trn Dept Payment To GenCos

Published

3 days ago

February 23, 2026

The Tide

The Nigeria Labour Congress and the Association of Power Generation Companies have engaged in a showdown over federal government legacy debt.

NLC president Joe Ajaero has faulted the federal government’s move to give GenCos N3 trillion from the Federation account as repayment for a power sector legacy debt, which amounts to N6.5 trillion.

In a statement on Thursday, Ajaero said the Federal Government proposed the N3 trillion payment and the N6 trillion debt as a heist and grand deception to shortchange the Nigerian people.

“Nigerians cannot and should not continue to pay for darkness,” Ajaero stated.

Meanwhile, the Chief Executive Officer of the Association of Power Generation Companies, APGC, Dr. Joy Ogaji, said Ajaero may be ignorant of the true state of things, insisting that the federal government is indebted to GenCos to the tune of N6.5 trillion.

She feared the longstanding conflict could result in the eventual collapse of the country’s power.

According to her, the federal government’s N501 billion issuance of power sector bonds is inadequate to address its accumulated debt.

Oil & Energy

PENGASSAN Rejects Presidential EO On Oil, Gas Revenue Remittance ……… Seeks PIA Review

Published

3 days ago

February 23, 2026

The Tide

The Natural Gas Senior Staff Association of Nigeria(PENGASSAN) Festus Osifo, has faulted the public explanation surrounding the Federal Government’s recent oil revenue Executive Order(EO).

President of the association, Festus Osifo, argued that claims about a 30 per cent deduction from petroleum sharing contract revenue are misleading.

Recall that President Bola Ahmed Tinubu, last Wednesday, February 18, signed the executive order directing that royalty oil, tax oil, profit oil, profit gas, and other revenues due to the Federation under production sharing, profit sharing, and risk service contracts be paid directly into the Federation Account.

The order also scrapped the 30 per cent Frontier Exploration Fund under the PIA and stopped the 30 per cent management fee on profit oil and profit gas retained by the Nigerian National Petroleum Company Limited.

In his reaction, Osifo, while addressing journalists, in Lagos, Thursday, said the figure being referenced does not represent gross revenue accruing to the Nigerian National Petroleum Company Limited.

He explained that revenues from production sharing contracts are subject to several deductions before arriving at what is classified as profit oil or profit gas.

Osifo also urged President Bola Tinubu to withdraw his recently signed Presidential Executive Order to Safeguard Federation Oil and Gas Revenues and Provide Regulatory Clarity, 2026.

He warned that the directive undermines the Petroleum Industry Act and could create uncertainty in the oil and gas industry, insisting that any amendment to the existing legal framework must pass through the National Assembly.

Osifo argued that an executive order cannot override a law enacted by the National Assembly, describing the move as setting a troubling precedent.

“Yes, that is what should be done from the beginning. You can review the laws of a land. There is no law that is perfect,” he said.

He added that the President should constitute a team to review the PIA, identify its strengths and weaknesses, and forward proposed amendments to lawmakers.

“When you get revenue from PSC, you have to make some deductibles. You deduct royalties. You deduct tax. You also deduct the cost of cost recovery. Once you have done that, you will now have what we call profit oil or profit gas. Then that is where you now deduct the 30 per cent,” he stated..

According to him, when the deductions are properly accounted for, the 30 per cent being referenced translates to about two per cent of total revenue from the production sharing contracts.

“In effect, that deduction is about two per cent of the revenue of the PLCs,” he added, maintaining that the explanation presented in the public domain did not accurately reflect the structure of the deductions.

Osifo warned that removing the affected portion of the revenue could have operational implications for NNPC Ltd, noting that the funds are used to meet salary obligations and other internal expenses.

“That two per cent is what NNPC uses to pay salaries and meet some of its obligations.The one you are also removing from the midstream and downstream, it is part of what they use in meeting their internal obligations. So as you are removing this, how are they going to pay salaries?” he queried.

Beyond the immediate impact on the company’s workforce, he cautioned that regulatory uncertainty could affect investor confidence in the sector.

“If the international community and investors lose confidence in Nigeria, it has a way of affecting investment. That should be the direction. You don’t put a cow before the horse,” he added.

According to him, stakeholders, including labour unions and industry operators, should be given the opportunity to make inputs at the National Assembly as part of the amendment process saying “That is how laws are refined,”