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Nigeria Tops African Oil Production List, Market Prices Falls

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CEM REPORT, ENERGY | Nigeria produced 1.184 million barrels of crude oil per day in the month of May 2023.

This is as the nation’s economy expanded by 2.4% year-on-year in the first quarter of 2023.

According to the Organization of Petroleum Exporting Countries (OPEC), the amount of crude oil production places Nigeria as the top crude oil producer in Africa for May 2023.

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Nigeria took the top spot for the month ahead of Libya (1.158 million barrels per day), Angola (1.111 million barrels per day), and Algeria (962,000 barrels per day).

OPEC explained that in April 2023, Nigeria experienced its first decline in crude oil production, with OPEC reporting a daily output of 999,000 barrels.

The report stated that Nigeria’s economy grew by 2.4% y-o-y in Q1’23, after a growth of 3.6% y-o-y in Q4’22.

The slow growth was attributed to various factors, including a decline in crude oil output.

“Slowing growth in the services sector, slowing crude oil output, and a deceleration in manufacturing and farming industries are among the most important issues.”

Furthermore, the report said the OPEC Reference Basket (ORB) fell by $8.31, or 9.9%, m-o-m to average $75.82/b in May. The ICE Brent front-month contract declined by $7.68, or 9.2%, m-o-m to $75.69/b, and NYMEX WTI front-month contract declined by $7.82, or 9.8%, m-o-m to average $71.62/b.

“The DME Oman front-month contract declined by $8.69, or 10.4% m-o-m, to settle at $74.78/b. The front-month ICE Brent/NYMEX WTI spread widened by 14¢ m-o-m to average $4.07/b in May. The futures forward curves of ICE Brent, NYMEX WTI and DME Oman weakened during the month, and hedge funds and other money managers heavily cut bullish positions in ICE Brent and NYMEX WTI.”

“On a monthly average, the ICE Brent front-month contract fell by $7.67, or 9.2%, to stand at $75.69/b in May. The NYMEX WTI front-month contract fell by $7.82, or 9.8%, to an average of $71.62/b. DME Oman crude oil futures prices fell m-o-m by $8.70, or 10.4%, to settle at $74.78/b.”

It added that crude oil futures prices extended their losses in May experiencing a heavy selloff.

“Market sentiment weakened due to renewed worries about an economic slowdown and re-emerging US banking sector concerns. Investor sentiment also came under additional pressure after the US Federal Reserve increased its key interest rate again. Selloffs from hedge funds and other money managers cut net long positions by about 120 mb, fuelling the price decline.”

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