Nigeria's Communal Rioting Stabilizes Global Oil Markets

Strategic Insights -

Renewed rioting in Nigeria temporarily steadied world crude oil markets on May 26, 1994, as prices rebounded from a sharp decline the previous day. West Texas Intermediate (WTI) crude oil futures for July delivery gained 4 cents to $17.74/bbl on the New York Mercantile Exchange, following a 25-cent/bbl reduction in domestic crude oil prices. Nigeria's force majeure declaration on Bonny Light crude oil exports due to communal rioting has had a mixed impact on global oil markets, with some buyers taking advantage of lower prices to purchase North Sea cargoes.

Key Takeaways:

  • The WTI-Brent spread widened 4 cents to $1.62/bbl, encouraging U.S. and Canadian buying of North Sea cargoes.
  • Nigeria declared force majeure on exports of Bonny Light crude oil due to communal rioting in the production area.
  • Buyers cut posted prices on domestic crude oils by 25 cents/bbl, reducing the term contract value of WTI to $16.50.
  • Capline, the principal crude oil pipeline between the Gulf Coast and the Midwest, instituted prorationing of shipments on its 1.2 million b/d system due to heavy demand from shippers.
  • Midwest crude oil inventories are about 8 million bbl lower than a year ago.
  • India tendered to buy five to seven cargoes of Dubai crude oil, and there were reports it might purchase as many as nine.
  • The 3-2-1 crack spread dropped back 6 cents to $3.37/bbl.

Statistics:

  • West Texas Intermediate (WTI) crude oil futures for July delivery gained 4 cents to $17.74/bbl.
  • Buyers cut posted prices on domestic crude oils by 25 cents/bbl, reducing the term contract value of WTI to $16.50.
  • Nigeria declared force majeure on exports of Bonny Light crude oil due to communal rioting in the production area.
  • Capline, the principal crude oil pipeline between the Gulf Coast and the Midwest, has a 1.2 million b/d capacity.
  • Midwest crude oil inventories are about 8 million bbl lower than a year ago.
  • India tendered to buy five to seven cargoes of Dubai crude oil.
  • The WTI-Brent spread widened 4 cents to $1.62/bbl.
  • Unleaded regular gasoline futures for June delivery to New York Harbor fell 0.18 cents to 51.49 cents/gallon.

Sources:

  • WASHINGTON -- Renewed rioting in Nigeria temporarily stabilized world crude oil markets Thursday, as prices rallied from another sharp decline. (Source: Washington Post, May 26, 1994)
  • West Texas Intermediate (WTI) crude oil futures for July delivery gained 4 cents to $17.74/bbl on the New York Mercantile Exchange. (Source: The Oil Daily, May 26, 1994)
  • Buyers generally cut posted prices on domestic crude oils by 25 cents/bbl, reducing the term contract value of WTI to $16.50. (Source: The Oil Daily, May 26, 1994)
  • Capline, the principal crude oil pipeline between the Gulf Coast and the Midwest, instituted prorationing of shipments on its 1.2 million b/d system due to heavy demand from shippers. (Source: The Oil Daily, May 26, 1994)
  • Midwest crude oil inventories are about 8 million bbl lower than a year ago. (Source: The Oil Daily, May 26, 1994)
  • India tendered to buy five to seven cargoes of Dubai crude oil, and there were reports it might purchase as many as nine. (Source: The Oil Daily, May 26, 1994)