Nigeria's Minister for Petroleum Resources, Ibe Kachikwu says the country supports OPEC's efforts to stabilize oil prices, but wants to wait before deciding whether join the cartel's cuts in oil production.
As Andy Hall, a hedge fund manager has said, OPEC has failed its mission, by cutting production instead of exports, and by "talking up" the market, letting USA shale drillers to attract investors while prices briefly soared.
The dollar struggled against most of its primary trading partners, trading at $1.1477 against the euro and 113.62 against the yen, a 0.26 percent decline against the Japanese currency.
"Nigeria is beginning to recover from the difficulties it had as a result of the loss in oil production". By setting a range for the production ceiling, OPEC was "making provisions for the expected recovery of production" from Libya, Nigeria and Iran, he said.
In its latest report, the IEA stated that global oil supply rose 720,000 bpd in June with increased production in OPEC and non-OPEC countries. Demand accelerated in the second quarter, growing to 97.4 million barrels a day - 1.5 million barrels a day faster than in the second quarter of 2016. And it was set to increase at around the same pace again next year to 99.4 million bpd. Without a further extension of the OPEC agreement, EIA would expect larger inventory builds and lower prices in 2018 than are included in this forecast. USA shale production continues to rise; inventories remain elevated; and the markets are concerned that the OPEC cuts are not doing enough to drain the surplus.
There was evidence of strong important demand from China in June's trade data with average imports increasing to 8.55mn bpd during the first half of 2016, an increase of 13.8% from the same period in 2016. That's more than what most OPEC members export.More news: Five-judge constitution bench to hear Aadhar petitions on July 18
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However, watchdog also highlighted a stronger outlook for global oil demand in its monthly report, as consumption of the product has risen in Germany and the USA in recent months.
The OPEC and non-OPEC technical committee has requested that Libya and Nigeria attend its meeting on July 24 and report on their oil production.
On the bullish side, the market is being supported by EIA remarks from earlier in the week calling for US crude oil production to rise by less than previously forecast next year due to a lower price outlook. Production from those two countries, in particular, has surged in recent months, undermining the attempted cutbacks and helping to derail widespread predictions of a rally.
In fact, PIRA Energy estimates predict that in three years the USA will export 2.25m barrels a day, against the 2.1m b/d of Kuwait, 1.7m b/d of Nigeria, and 1m b/d of the U.S. at the beginning of the year.
However, market watchers should keep a careful eye on the numbers, because Libya and Nigeria may not actually be required to remove almost as much oil from the market as might be assumed.