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Export of Qua Iboe crude oil suffers set-back

Nigeria’s Qua Iboe crude oil blend has been delayed for five days, with operator ExxonMobil planning to issue a revised loading plan, according to traders.
ExxonMobil

ExxonMobil

• Prices drop further to $47.62 a barrel

Nigeria’s Qua Iboe crude oil blend has been delayed for five days, with operator ExxonMobil planning to issue a revised loading plan, according to traders.

Besides, Brent crude, the global oil benchmark, fell 0.7 per cent to $47.62 a barrel in Wednesday midmorning trade on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.6 per cent at $46.33 a barrel.

A delay in the ramp up of a pipeline at the Qua Iboe terminal is behind the change to loading plans, according to market sources.

Qua Iboe was under force majeure from mid-May until early June after an accident on a drilling rig damaged a pipeline, forcing Exxon to lower production.

Differentials to dated Brent for Qua Iboe had firmed notably after Vitol purchased four August-loading cargoes. There were ten cargoes planned for export in each of July and August.

Crude oil prices went down on worries that Britain’s vote to leave the European Union would slow economic growth and dent crude oil demand. Expectations of U.S. crude stockpile growth and further weakness in the Chinese economy created additional headwinds.

This situation has also significantly impacted global currency exchange rates in the latest session. In the latest session, the British pound dipped to new 31-year lows against the U.S. dollar. The strength of the USD has an inverse relationship with crude oil prices, as a stronger dollar makes commodities more expensive for consumers using other currencies.

The huge decline in the value of the Pound came after the British central bank’s negative comments about the economic outlook and financial stability.

In addition to the Brexit factor, crude oil prices declined sharply on the back of the potential threat of increasing supplies. Crude oil production from Libya is likely to double in the coming days due to the expected merger of the National Oil Corporation with its domestic rivals. Traders also fear the impact stemming from the growth in U.S. rig counts over the last several weeks.

The increase in the U.S. rig count is a clear sign that U.S. producers are going to increase their supply volumes. Based on data from Genscape, crude oil supplies increased last week by 230,025 barrels at the Cushing, Oklahoma facility alone. Crude oil prices are likely to remain under pressure in the following sessions if they do not experience any relief from API and EIA data, which is due on Wednesday and Thursday, respectively.

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