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Oil prices stabilise after wild swings on prospect of crude stockpiles release

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Oil prices stabilise after wild swings on prospect of crude stockpiles release
© Reuters. FILE PHOTO: Oil and gas tanks are seen at an oil warehouse at a port in Zhuhai, China October 22, 2018. REUTERS/Aly Song/File Photo

By Aaron Sheldrick

TOKYO (Reuters) – Oil prices steadied on Friday as investors paused for breath following a day of wild swings prompted by the prospect of coordinated action by the world’s major economies to release official crude reserves from stocks.

was up 28 cents or 0.3% at $81.52 a barrel by 0145 GMT, after falling to a six-week low on Thursday before rebounding to close 1.2% higher.

was up 19 cents at $79.20 a barrel, having swung through a more than $2 range the previous session before closing up. Both are heading for a fourth week of declines.

The market gyrations followed a Reuters report that the United States had asked China, Japan and other big buyers to join a release of crude stocks from Strategic Petroleum Reserves (SPR).

“The market remains fundamentally tight and any volumes released are unlikely to substantially alter the global balance,” Fitch Solutions commodities analysts said in a note. “As such, we expect any downside to prices to be limited in both scale and duration.”

The Biden administration’s push for a coordinated release of oil stockpiles has been seen as a signal to the OPEC+ production group that it should raise output to address concerns of high fuel prices in the world’s biggest economies, starting with the United States, China and Japan.

OPEC+, grouping the Organization of the Petroleum Exporting Countries (OPEC), Russia and other producers, has maintained what analysts says is unprecedented restraint on production, even as prices have rebounded from the depths of the early stages of the coronavirus pandemic.

Meanwhile data showing Saudi Arabia’s oil exports hit an eight-month high in September, rising for a straight fifth month, also helped keep prices in check.

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Commodities

The U.S. has decided to produce crude oil in Venezuela

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crude oil in Venezuela

The U.S. wants to give the U.S. Chevron Corp., one of the largest oil companies in the country, a license to produce crude oil in Venezuela, according to The Wall Street Journal.

There will be new American oil executives in Venezuela. This is a signal of easing sanctions against the country, the newspaper said. Chevron has decided to regain partial control over oil production in Venezuela’s fields, in which the company paid a share due to joint ventures with Petroleos de Venezuela SA.

Talk of new investment is not yetunderway, because the debts to Chevron are not repaid. This may take several years, the sources say.

In July, Diosdado Cabello, leader of the parliamentary faction and vice president of the ruling United Socialist Party of Venezuela (PSUV), accused the U.S. of attacks on the country’s oil facilities. Venezuela has been under U.S. oil sanctions since 2019. In June of this year, the State Department allowed Italian Eni and Spanish Repsol to supply oil from Venezuela to Europe.

Earlier we reported that more than 50% of Germans said they refused to buy new clothes and electronics.

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Commodities

Bloomberg: UAE to boost oil production beyond plan by 2025

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UAE to boost oil production

UAE to boost oil production. One of Russia’s main competitors for oil exports plans to reach five million barrels per day by 2025. The Middle Eastern country was initially expected to reach this level only by 2030, Bloomberg reported, citing sources.

“Energy concern Abu Dhabi National Oil Co. (Adnoc), which produces almost all of the UAE’s oil, wants to be able to produce 5 million barrels a day by 2025. The company planned to reach such a level only by 2030,” – says the material.

But a crude oil production boost will be difficult without additional financing for expenses for the project. Adnoc explained the acceleration of production increase by the policy of the leading countries of the world on accelerated energy transition to renewable energy sources (RES).

“As we embrace the energy transition and focus our business on the future, we will continue to explore potential opportunities that can further add value, free up capital and improve profitability,” the Arab oil company said.

To realize the goal, Adnoc has asked international companies that are partners in its oil fields to increase long-term crude production by 10% or more, sources said. In the case of positive results of the negotiations, the UAE will be able to significantly increase the volume of oil production by 2025, concludes Bloomberg.

On September 19, the Times of India, citing sources in the Indian Ministry of Commerce, reported that the Asian country has saved since February 2022, $439.7 million on imports from Russia of oil at a discount. A total of about 62.5 million barrels of Russian crude were purchased by Indian state and private companies over the last six months. Moreover, volumes of imports have increased many times over as compared to 2021.

Earlier, we reported that Nigeria stopped benefiting from the sale of Nigerian oil due to the lack of dollars.

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Commodities

FT: Nigeria stopped benefiting from Nigeria crude oil sales due to lack of dollars

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nigeria crude oil sales

Nigeria’s crude oil sales used to grow steadily. But now the country, which is considered one of the world’s largest oil exporters, is facing a crisis. The country is short of dollars, and the factor of “massive theft” has only exacerbated the problems of the African state, reports the Financial Times.

“Since the beginning of the year, Nigeria’s foreign exchange reserves have fallen by 5%, to $38 billion. Restrictions on the purchase of dollars and the resulting deficit has led to the emergence of a black currency market. $1 is worth 420 naira at the official exchange rate and 700 naira on the black market,” the paper said.

Because of increasing corruption in the country, Nigeria, the world’s tenth largest oil exporter, can no longer increase production of crude oil. Nigerian crude oil buyers are not happy with this fact. The African state exports a little more than half of the established OPEC quota – 1.1 million barrels per day, instead of the required 1.8 million.

Despite all the difficulties going on in Nigeria’s economy, Timipre Silva, the African country’s Minister of State for Petroleum, announced plans to increase liquefied natural gas (LNG) exports to Europe by the coming winter. According to him, to realize this goal, it is necessary to improve safety in Nigeria’s fields and infrastructure.

Earlier we reported that coffee stocks in Brazil in six months will approach a record low level

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